0000941221icl:OtherCurrentLiabilitiesMembericl:RMBCurrencyRiskMember 2021-01-01 2021-12-31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
| (Mark One) | |
| ☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the fiscal year ended December 31, |
OR
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR
| ☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
Date of event requiring this shell company report |
For the transition period fromto. |
Commission File Number: 001-13742
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English)
Israel
(Jurisdiction of incorporation or organization)
Millennium Tower, 23 Aranha Street, P.O. Box 20245 Tel Aviv, 61202 Israel
(Address of principal executive offices)
Aya Landman
Compliance
Millennium Tower, 23 Aranha St.
Tel-Aviv 6120201 Israel
Tel: +972 (3) 6844440
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Ordinary Shares, par value NIS 1.00 per share | ICL | The New York Stock Exchange |
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
The number of outstanding shares as of December 31, 20182021 was:
Title of Class | Number of Shares Outstanding |
Ordinary shares |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒ No ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ☐No ☒
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☒No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “large accelerated filer,” “accelerated filer,” and large accelerated filer”“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):Act:
Large Accelerated Filer ☒ | Accelerated Filer ☐ | Non-accelerated Filer ☐ |
Emerging Growth Company ☐ |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
☐U.S. GAAP
☒International Financial Reporting Standards as issued by the International Accounting Standards Board
☐ Other
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has elected to follow.
☐ Item 17☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐No ☒
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes ☐No ☒
Annual Report
For the Period Ended December 31, 2021
ICL Group Ltd |  |
TABLE OF CONTENTS
| PART I | Page | ||||
| 1 | |||||
| 1 | |||||
| 1 | |||||
| PART II | |||||
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. The Company is relying on the safe harbor provided in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, in making such forward-looking statements.
Forward‑looking statements appear in a number ofseveral 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:
Forward‑looking statements speak only as atof 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.
The U.S. Securities and uncertainties. Our actual results may differ significantly from future resultsExchange Commission (the “SEC”), adopted final rules in 2018 to amend and modernize the mineral property disclosure requirements for issuers whose securities are registered with the SEC under the U.S. Securities Act of 1933, as amended (“Securities Act”), or the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). These amendments, which we refer to as the SEC Mining Modernization Rules, became effective February 25, 2019, with compliance required for the first fiscal year beginning on or after January 1, 2021. The SEC Mining Modernization Rules rescinded the historical property disclosure guidance for mining registrants included in SEC Industry Guide 7 and replaced them with the disclosure requirements in subpart 1300 of SEC Regulation S-K (“S-K 1300”). As a result of the adoption of the SEC Mining Modernization Rules, the SEC now recognizes estimates of “Measured Mineral Resources,” “Indicated Mineral Resources” and “Inferred Mineral Resources.” Accordingly, ICL presents new information with respect to its mining and operation plants in this Annual Report, including resource and reserve estimates, which differ materially from the reserve estimates presented historically by ICL.
A Mineral Resource is a reasonable estimate of mineralization, taking into account relevant factors, such as cut-off grade, likely mining dimensions, location or continuity that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled.” The Mineral Resources presented in this Annual Report are not Mineral Reserves and do not reflect demonstrated economic viability. The estimates of Mineral Resources may be materially affected if mining, metallurgical, or infrastructure factors at the corresponding properties change from those set forthcurrently assumed by ICL.
Mineral Reserves are reported as the economically mineable portion of a Measured Mineral Resource and/or Indicated Mineral Resource, and take into consideration the mining, processing, metallurgical, economic, marketing, legal, environmental, infrastructure, social, and governmental factors (the “modifying factors”) that may be applicable to the deposit. Mineral Resources that are not Mineral Reserves do not meet the threshold for reserve modifying factors, such as estimated economic viability, that would allow for conversion to Mineral Reserves. There is no certainty that all or any part of a Mineral Resource will be converted into a Mineral Reserve. Estimates of Inferred Mineral Resources have significant geological uncertainty, and it should not be assumed that all or any part of an Inferred Mineral Resource will be converted to the Measured or Indicated categories.
Figures related to our mineral and resource estimates are rounded to reflect the relative accuracy of the estimates, and totals may not add correctly. In addition, the Mineral Resource and Reserve estimates are based on the factors related to the geological and grade models discussed in “Item 3 - Key Information—4 ‑ Information on the Company— D. Risk Factors”Property, Plant and ”Item 5 - OperatingEquipment,” and Financial Reviewthe criteria for reasonable prospects of eventual economic extraction as described therein. The Mineral Resource and Prospects.”Reserve estimates may be affected, positively or negatively, by additional exploration that expands the geological database and models of the properties described. The Mineral Resource and Reserve estimates could also be materially affected by any significant changes in the assumptions regarding forecast product prices, mining efficiency, process recoveries, or production costs. If the price assumptions decrease or the assumed production costs increase, then the cut-off grade would increase. The potential impacts on the Mineral Resource and Reserve estimates may be material and such estimates may need to be re-evaluated. The Mineral Resource and Reserve estimates are also based on certain critical assumptions, such as requisite mining permits continuing to be granted as-needed, tax rates remaining stable, and the absence of additional regulations on the corresponding properties. Except as described in “Item 4 ‑ Information on the Company— D. Property, Plant and Equipment” and the Technical Report Summary (defined below), Wardell Armstrong International Ltd (“Wardell”), our qualified persons, are not aware of any environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant factors that could materially affect the Mineral Resource estimates.
INTRODUCTION
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.US dollars at specified rates solely for your convenience. Unless otherwise indicated, we have translated NIS amounts as atof December 31, 2018,2021, into U.S.US dollars at an exchange rate of NIS 3.748 to $1.00, and euro amounts into U.S. dollars at an exchange rate of €0.8733.110 to $1.00, the daily representative exchange rate reported by the Bank of Israel foras of December 31, 2018.2021. Euro amounts were translated into US dollars at an exchange rate of €0.884 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, certainsome 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 fromour customers, and other third-partythird-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,Corp.,” we refer to our controlling shareholder, Israel CorporationLtd. Unless otherwise indicated or the context otherwise requires, references in this Annual Report to “NIS” are to the legal currency of Israel, “U.S.“US dollars”, “$” or “dollars” are to United States dollars, “euro” or “€” are to the Euro,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.
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 leading non-profit organization in the greenhouse gas emissions reporting field. |
| CFR | Cost and |
| 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 that provides information on global mining, metal and fertilizers market. |
| ICL ADS | ICL América do Sul (formerly Compass Minerals América do Sul S.A.). |
| Dead Sea Bromine | Dead Sea Bromine Company Ltd., included in the Industrial Products segment. |
| MAP | Monoammonium Phosphate, a fertilizer containing nitrate and phosphorus oxide. |
| GTSP | Granular Triple Superphosphate, used as fertilizer, a source of high phosphorus. |
| GSSP | Granular Single Superphosphate, used as a phosphate fertilizer. |
| Green Hydrogen | Hydrogen produced by splitting water into hydrogen and oxygen using renewable electricity. |
| 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 |
| Cost Per Ton. | |
CIF | Cost, Insurance, and Freight. In CIF transaction, the price of goods includes, as well as FOB expenses, the expenses for insurance, shipping and any other costs that arise after the goods leave the factory gates and up to the destination port. |
| ICL Haifa (Fertilizers & Chemicals) | Fertilizers and Chemicals Ltd., included in the Innovative Ag Solutions segment. |
| GHG | Greenhouse Gases – air emissions contributing to climate change. |
| Granular | Fertilizer having granular particles. |
| ICL Boulby | A United Kingdom |
| ICL Iberia (Iberpotash) | Iberpotash S.A., a Spanish |
| IC | Israel Corporation Ltd. |
| That part of a mineral resource for which quantity and grade or quality are estimated on the basis of adequate geological evidence and sampling. The level of geological certainty associated with an indicated mineral resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Because an indicated mineral resource has a lower level of confidence than the level of confidence of a measured mineral resource, an indicated mineral resource may only be converted to a probable mineral reserve. | |
| Inferred Mineral Resource | That part of a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. The level of geological uncertainty associated with an inferred mineral resource is too high to apply relevant technical and economic factors likely to influence the prospects of economic extraction in a manner useful for evaluation of economic viability. Because an inferred mineral resource has the lowest level of geological confidence of all mineral resources, which prevents the application of the modifying factors in a manner useful for evaluation of economic viability, an inferred mineral resource may not be considered when assessing the economic viability of a mining project and may not be converted to a mineral reserve. |
| DSW | Dead Sea Works Ltd., included in the Potash segment. |
| Dead Sea Magnesium Ltd., included in the Potash segment. | |
| ICL Neot Hovav | Subsidiaries in the Neot Hovav area in the south of Israel, including facilities of Bromine Compounds |
| Rotem Amfert Negev Ltd., included in the Phosphate Solutions segment. | |
| IFA | The International Fertilizers Industry Association, an international association of fertilizers manufacturers. |
| ILA | Israel Land |
| IMF | International Monetary Fund. |
| K | The element potassium, one of the three main plant nutrients. |
KNO3 | Potassium Nitrate, a 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. |
| Measured Mineral Resource | That part of a mineral resource for which quantity and grade or quality are estimated on the based on conclusive geological evidence and sampling. The level of geological certainty associated with a measured mineral resource is sufficient to allow a qualified person to apply modifying factors, as defined in this section, in sufficient detail to support detailed mine planning and final evaluation of the economic viability of the deposit. Because a measured mineral resource has a higher level of confidence than the level of confidence of either an indicated mineral resource or an inferred mineral resource, a measured mineral resource may be converted to a proven mineral reserve or to a probable mineral reserve. |
| Mineral Reserve | An estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of the qualified person, can be the basis of an economically viable project. More specifically, it is the economically mineable part of a measured or indicated mineral resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted. |
| Mineral Resource | A concentration or occurrence of material of economic interest in or on the Earth's crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction. A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled. |
| MoEP | Israel Ministry of Environmental Protection. |
| N | The element nitrogen, one of the three main plant nutrients. |
| P | The element phosphorus, one of the three main plant nutrients, which is also used as a raw material in industry. |
| NPK | Complex fertilizer comprised primarily of 3 primary nutrients (N,P,K). |
| NYSE | The New York Stock Exchange. |
| 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. |
| Probable Mineral Reserve | The economically mineable part of an Indicated and, in some cases, a Measured Mineral Resource. Quantity, grade and/or quality of Probable Mineral Reserves are computed from information similar to that used for Proven Mineral Reserves, but the sites for survey, sampling and measurement are further apart or are otherwise less efficiently spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation. |
| Proven Mineral Reserve | The economically mineable part of a Measured Mineral Resource. Proven Mineral Reserve quantities are computed from information received from explorations, channels, wells, and drilling; grade and/or quality are computed from the results of detailed sampling. The sites for inspection, sampling and measurement for proven reserves are spaced so closely to each other so that the geologic character is well defined so the size, shape, depth and mineral content of reserves can be reliably determined. |
| Chlorine | A chemical, raw material in various productions process. A byproduct of Dead Sea Magnesium production. |
| Sylvinite | A byproduct from the production of Magnesium from the raw material – Carnallite. Transferred to DSW as an additional source for potash production. |
| 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. |
| TCFD | Task Force on Climate-Related Financial Disclosures. |
| SASB | Sustainability Accounting Standards Board. |
| REACH | Registration, Evaluation, |
| 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). |
| 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 |
| 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 |
Item1 – IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
Not Applicable.
Item2 – 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 December31, 2018, 2017, 2016, 20152021, 2020 and 20142019 and the consolidated statements of financial position as of December 31, 2018, 2017, 2016, 20152021, 2020 and 20142019 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, 2018, 2017, 2016, 20152021, 2020 and 2014.2019. 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.US dollar. Our historical results are not necessarily indicative of our results to be expected in any future period.
ICL Group Limited 1
Selected financial data:
| For the Year Ended December 31, | |||||
| 2018 | 2017 | 2016 | 2015 | 2014 | |
| US$ millions, except for the share data | |||||
| For the Year Ended December 31, | |||
| 2021 | 2020 | 2019 | |
| US$ millions | |||
| 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) : | |||||
| 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 |
Sales | 6,955 | 5,043 | 5,271 |
Gross profit | 2,611 | 1,490 | 1,817 |
Operating income | 1,210 | 202 | 756 |
Income before taxes on income | 1,092 | 49 | 628 |
Net income attributable to the shareholders of the Company | 783 | 11 | 475 |
Earnings per share (in dollars): | |||
Basic earnings per share | 0.61 | 0.01 | 0.37 |
Diluted earnings per share | 0.60 | 0.01 | 0.37 |
Weighted average number of ordinary shares outstanding: | |||
Basic (in thousands) | 1,282,807 | 1,280,026 | 1,278,950 |
Diluted (in thousands) | 1,287,051 | 1,280,273 | 1,282,056 |
Dividends declared per share (in dollars) | 0.21 | 0.09 | 0.22 |
| For the Year Ended December 31, | |||
| 2021 | 2020 | 2019 | |
| US$ millions | |||
Statements of Financial Position Data: | |||
Total assets | 11,080 | 9,664 | 9,173 |
Total liabilities | 6,344 | 5,576 | 5,112 |
Total equity | 4,736 | 4,088 | 4,061 |
| As at December 31, | |||||
| 2018 | 2017 | 2016 | 2015 | 2014 | |
| US$ millions | |||||
ICL Group Limited 2
| 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 |
Adjustments to reported operating and net income (non-GAAP financial measures)
We disclose in this Annual Report non-IFRS financial measures titled adjusted operating income and adjusted net income attributable to the Company’s shareholders. Our management uses these adjusted measures to facilitate operating performance comparisons from period to period. We calculate our adjusted operating income by adding certain items, as set forth in the reconciliation table below. Some of these items may recur. We calculate our adjusted net income attributable to the Company’s shareholders by adding certain items, as set forth in the reconciliation table below, excluding the total tax impact of such adjustments.
You should not view adjusted operating income or adjusted net income attributable to the Company’s shareholders as a substitute for operating income or net income attributable to the Company’s shareholders as determined in accordance with IFRS, and you should note that our definitions of adjusted operating income and adjusted net income attributable to the Company’s shareholders may differ from those used by other companies. Additionally, other companies may use other measures to evaluate their performance, which may reduce the usefulness of our non-IFRS financial measures as tools for comparison. However, we believe adjusted operating income and adjusted net income attributable to the Company’s shareholders provide useful information to both management and investors by excluding certain items that management believes are not indicative of our ongoing operations. Our management uses these non-IFRS measures to evaluate the Company's business strategies and management's performance. We believe that these non-IFRS measures provide useful information to investors because they improve the comparability of our financial results between periods and provide for greater transparency of key measures used to evaluate our performance.
ICL Group Limited 3
The table below reconciles total adjusted operating income and total adjusted net income attributable to the shareholders of the Company, to the comparable IFRS measures:
| For the Year Ended December 31, | |||
| 2021 | 2020 | 2019 | |
| US$ millions | |||
| Operating income | 1,210 | 202 | 756 |
| Dispute and other settlement expenses (1) | 5 | - | 7 |
| Divestment related items and transaction costs from acquisitions (2) | (22) | - | - |
| Impairment and disposal of assets, provision for closure and restoration costs (3) | 1 | 229 | (3) |
| Provision for early retirement (4) | - | 78 | - |
| Total adjustments to operating income | (16) | 307 | 4 |
| Adjusted operating income | 1,194 | 509 | 760 |
| Net income attributable to the shareholders of the Company | 783 | 11 | 475 |
| Total adjustments to operating income | (16) | 307 | 4 |
| Total tax adjustments (5) | 57 | (60) | - |
| Total adjusted net income - shareholders of the Company | 824 | 258 | 479 |
| (1) | For 2021, the amount reflects settlement costs related to the termination of partnership and arbitration proceedings between ICL Iberia and Nobian and reimbursement of arbitration costs related to the Ethiopian potash project, which was partially offset by a reversal of a VAT provision following a court ruling in Brazil. |
| (2) | For 2021, the amount reflects a capital gain related to the sale of an asset located in the industrial area of Ashdod, Israel and to the divestment of the Zhapu site (China) from the Industrial Products segment, which was partially offset by an earnout adjustment relating to prior years' divestment, as well as transaction costs related to the acquisitions in Brazil. |
| (3) | For 2021, the amount reflects a disposal of a pilot investment, which will not materialize in Spain and an increase in restoration costs, offset by a reversal of an impairment due to the strengthening of phosphate prices at Rotem Israel. |
For 2020, the amount reflects an impairment and write-off of certain assets in Rotem Amfert Israel, following low phosphate prices and the discontinuation of the unprofitable production and sale of phosphate rock activity, which also led to an increase in the provision for asset retirement obligation (ARO) and in facility restoration costs. In addition, it reflects an impairment of assets and an increase in closure costs resulting from closure of the Sallent site (Vilafruns) in Spain.
For 2019, the amount reflects an agreement for the sale of assets, a partial reversal of impairment loss related to assets in Germany which was incurred in 2015 and an increase of the provision for the Sallent site closure costs as part of the restoration solution, together with an increase of the provision for the removal of prior periods waste in bromine production facilities in Israel.
| (4) | For 2020, the amount reflects an increase in the provision following the implementation of an efficiency plan, primarily through an early retirement plan, at Israeli production facilities (Rotem Israel, Bromine Compounds and Dead Sea Magnesium). |
| (5) | For 2021, the amount reflects the tax impact of the adjustments made to the operational income and tax expenses related to the release of trapped earnings of the Company and certain Israeli subsidiaries. For 2020, reflects the tax impact of the adjustments made to operational income. |
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 resultdue to of certain factors, including the risks facing the Company as described below and elsewhere in the Annual Report. This Annual Report contains forward‑looking statements that involve risks and uncertainties, see “Special Note Regarding Forward‑Looking Statements“. Material risks that may affect our business, operating results and financial condition include, but are not necessarily limited to, those relating to:
| • | 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. |
| • | As a leading global specialty minerals company, we are exposed to various legislative, regulatory and licensing restrictions in the areas of environmental protection and safety. Related compliance costs and liabilities may adversely affect the results of our operations. |
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.
Securing the future of the phosphate mining operations at Rotem Israel depends on obtaining several approvals and permits from the authorities in Israel.
| • | 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. |
The continued spread of the COVID-19 pandemic has affected and may in the future materially and adversely affect our financial condition and results of operations.
Our operations and sales are exposed to volatility in 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.
| • | Our operations could be adversely affected by price increases or shortages with respect to water, energy and our principal raw materials. |
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 in Israel, requires regular harvesting salt 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 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 to enable the continuation of the Company's operations in the Dead Sea.
ICL Group Limited 5
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.
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 results and financial condition.
Our tax liabilities may be higher than expected.
Due to the nature of our operations, 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 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
Our mining business dependsmineral 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 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.
There is no certainty as to the manner of interpretation of the provisions of the Concession Law in this context as willthat would be adopted in a legal proceeding, to the extent such proceeding wouldwere to 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 to our Audited Financial Statements.
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There is no certainty that these concessions and leases will be extended and/or renewed under the same terms or at all. Failure to renew said concessions and leases or different terms could materially and adversely affect our business, financial condition and results of operations. For further information see Note 18 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 thea 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 miningDesert 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.
.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, there will beor a significant delay in receiving it, or in finding alternative sources of phosphates in Israel, will have a significant negative impact on the Group’sour future mining reserves in the medium and long term. Our business. As a result, our 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 to our Audited Financial Statements.
Spain
The mining rightsmineral leases of aICL Boulby, ICL's subsidiary in the United Kingdom (hereinafter – ICL Boulby), are based on approximately 114 mining74 mineral 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 miningmineral lease rights under the North Sea granted by the BritishThe Crown (Crown Estates), which includesEstates. The mineral lease rights with The Crown Estates, include provisions to explore and exploit theall targeted and known polyhalite mineral resources of the Polysulphate mineral. The said mining rightsinterest to ICL Boulby. Said leases cover a total area of about 374822 square kilometers. As atkilometers (onshore leases total around 32 square kilometers and offshore leases from the date of this report, allCrown Estates cover around 790 square kilometers). All the lease periods, licenses, easements and rights of way are effective, some until 2022 and others until 2038. The Company is acting to renew the rights necessary for the mining operation which expire in 2022, or, alternatively, to seek ownership of these rights. Regarding ICL Boulby's planning permit for mineral exploitation, which is valid until 2023, in December 2021, the North York Moors Park Authority Planning Committee approved ICL Boulby Mine’s application for the continuation of polyhalite and salt production for an additional 25 years, commencing 2023. Nevertheless, in the event such rights are not obtained, the mining activity in the UK may be substantially affected as well as the Company’s financial results. 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 to our Audited Financial Statements.
ICL Group Limited 7
China
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 successful 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.
Furthermore, our production processes generate byproducts, some of which are saleable while others must be reused or disposed of as waste. Storage, transportation, reuse and waste disposal are generally regulated by governmental authorities in the 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 storage, transportation, reuse and waste disposal, production may be interrupted or even ceased, which can lead to significant costs adversely affecting our operations and financial condition.
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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 ofDue to 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 some 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.
For example, our Polysulphate® business at the 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, AngloAmerican Plc, holds a concession to develop a polyhalite mine with an undetermined capacity, located in the same area as our Boulby mine. According to its recent announcement, the engineering design, capital budget and project schedule are expected to be completed by the end of 2022 with an additional capital investment of approximately $700 million. If the development of the new mine materializes, ICL will cease to be the sole producer of Polysulphate® and may not be the market leader in terms of production throughput, which is inconsistent with the Company's strategy to obtain a leadership position in all its activities. We continuously monitor our competitive environment and will continue to seek ways to adhere with our 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”.
Moreover, some of our products are marketed through distributors, mainly as pertains to the activity of theour Phosphate Solutions segment and Specialty Fertilizers business.
Any replacement of, or modification into the composition of our distributors might adversely affect the Company’sour competitive ability and causeresult in 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 resources and resource reserves on engineering, economic and geological data that is compiled and analyzed by our engineers and geologists. However, resource and 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, resources and reserve deposits,reserves, 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 ofseveral 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 our experience; |
ICL Group Limited 9 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 resource and resource reserves estimates.
Any revisions to our previous resource or reserve estimates or inaccuracies in our estimates related to our existing mineral resources 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.
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, including as a result of climate change
We are exposed to natural disasters, such as flooding and earthquakes which may cause material damage to our business. Inbusiness, and climate change has tended to cause certain types of natural disasters to become more severe or frequent. For example, in Israel, some of our plants are located onin 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 theour 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 dikesdykes 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 causeresult in disruptions to our mining activities or even a loss of the mine. We do not have full property insurance with respect to all our property/assets.
ICL Group Limited 10
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 pondsalt to be constantly raised 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 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 of the evaporation ponds at Sodom (Pond 5), in one of the sites of Dead Sea Works (hereinafter – DSW). The precipitated salt creates a layer on the Pond bed of approximately 20 million tonnes annually. Theproduction process of production of the raw material requires that a fixed brine volume is preserved in the Pond.Pond 5. Failure to maintain a constant volume of brine in Pond 5 could result in a reduction in production capacity. To this end, up to the solutionsend of 2021, the raising of the brines' level of the Pond is raised each year5 was according to the rate at which the poolpond floor rises.rises, while performing the salt harvest. Since the solutions' level maximum height (15.1 meters) was reached at the end of 2021, from 2022 onwards, the solutions' volume in Pond 5 will be preserved by way of harvesting the salt.
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 to our Audited Financial Statements.
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The receding water level in the northern basinNorthern Basin of the Dead Sea and the appearance of sinkholes 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 onemeter 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 through 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.
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 required. The P-9 Pumping Station commenced its operation in early 2022. The Company expects that it will be able to continue pumping water in the coming years. Failure to operate the P-9 pumping station or 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.
An additional risk related to 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. We are endeavoring to analyze the matter and to find solutions to prevent or retard this occurrencein the long term. We are conducting ongoing monitoring and acting on site to protect the dykes. As part of these efforts, research was conducted, designed to gather information for the detailed planning of a project to prevent the continued erosion of the stream. The research phase was completed in 2020 and the detailed design is expected to commence in the first half of 2022. Prior to commencing the project, we must obtain permits from the authorities, due to its engineering complexity, proximity to the border, soil instability and environmental sensitivity of the entire area. Insofar as a decision was made to commence the project, we estimate that its completion is likely to take several years.
Furthermore, as a result of the decline of the Dead Sea's 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 little activity by ICL Dead Sea. However, in recent years there has been a steady development of sinkholes around 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.
ICL Group Limited 12
Any malfunction in the transportation systems we use to ship our products, and receive raw materials 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 to the seaport facilities and/or the array of transportation from the seaports, including due to strikes by port workers,workers’ strike, regulatory restrictions and changes in the rights of use of seaport facilities, couldmay 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, shortage, or unavailability in the array of transportation to the seaports and between various sites, primarily through trains and trucks, carrying our products and the raw materials we use in our business could result in customer dissatisfaction, loss of production or sales and higher transportation or equipment costs.
We rely heavily upon truck, rail, tug, barge and ocean freight transportation to obtain the raw materials we need, to distribute raw materials between our mines and facilities and to deliver our products to our customers. In addition, the cost of transportation is an important part of the final sale price of our products. Finding affordable and dependable transportation is important in obtaining our raw materials and to supply our customers. Higher costs for these transportation services or an interruption or slowdown due to factors including high demand, high fuel and energy prices, labor disputes, layoffs or other factors 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 transportationconveyance of bromine. A malfunction in the transportation of hazardous materials, in one of our specialized transport facilities mightmay 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 causelead to a shutdown of such materials’ transportation systems for a certain period until the cause for such malfunction has beenis 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, 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; |
ICL Group Limited 13
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;
The imposition of tariffs, exchange controls, trade barriers or sanctions, new taxes or tax rates or other restrictions, including the current trade dispute between the US and |
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.
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, in part, due to sporadic preventive 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 COVID-19 pandemic has led us to modify 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 for the benefit of our employees, customers, partners and suppliers, or as required by government authorities. There is no certainty that such measures will be sufficient to mitigate the risks might make it economically unattractiveposed by the pandemic. Furthermore, our ability to utilize cash generated byperform certain functions may be affected if we are required to take additional steps.
We expect COVID-19 to have a continues impact over the coming quarters, although the full future impact on global economy and our operations in one countrybusiness is uncertain and is difficult to fundassess or predict. The extent of the impact of the COVID-19 pandemic on our operationsoperational 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 most 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 repaymentsthe development of liabilities in another country, supportmore 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.
The ability to purchase raw materials in times of shortages resulting from supply chain disruptions, quarantines, lockdown orders and production shutdowns.
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.
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 inof these materials, as well as by changes in transportation prices.prices.
In addition, 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 shortageLack of water at the water sources in proximityproximate 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.
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 — there isare dependent on these two sources, so significant malfunctions at the power station and/or interruption of power supply from the national grid in Israel may 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 significant damage to regular power supply may damage the plants and the environment.our magnesium production process.
ICL Group Limited 15
The current supply of natural gas to our power plant and to our subsidiariesfacilities in Israel is dependent on a single suppliernarrow range of suppliers, who may prefer exporting over supplying to the domestic market and also on a single gas pipeline with limited transmission capacity. In 2017, the Company signed an agreement with Energean who holds a license to develop the Karish and Tanin gas reservoirs to supply up to 13 BCM of natural gas (NG) over a period of 15 years commencing with the commercial operation of Karish and Tanin. The NG from the reservoirs will be used for operating ICL’s factories and power stations in Israel. In January 2022, Energean announced that the gas supply is expected to be postponed until the third quarter of 2022. Considering the expected high demand during the summer of 2022, which may lead to potential shortages in NG, as well as the continued delays in Energean’s supply, the Company is taking measures to secure its supply of NG until its full gas supply is obtained from Energean. Failure to ensure sufficient supply of NG and/or to preserve the current price environment may lead to a material impact on the Company's business, financial position and results of operations. For further information, see Note 18 to our Audited Financial Statements.
While our plants are prepared for theto use of alternative energy sources (fuel oil and/or diesel fuel), failure to obtain NG in a timely manner or energy shortages stemming from high demand in local markets, export preference and the like, can result in an increase in our energy costs and/or energy shortages,in production losses, and could materiallyadversely and adverselymaterially affect our business, financial condition and results of operations.
We can provide no assurance that we will be able to passimpose on to our customers increased costs relatingwith respect to water, energy or otherand principal raw materials, such as sulphur, ammonia and white acid that are supplied by third parties.materials. Our inability to pass onimpose 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.
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 planswe plan to complete several key projects, whose completion is very importantwhich are of great importance to the Company’s continued operation and ability to significantly improve its competitive position in somecertain markets. Thus, for example, we are advancing the salt harvest projectsignificant investments in Pond 5projects to increase our production capacity for our main product lines and 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, and significant 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 thea third-party contractor. Situations wherein such contractors encounter financial or operational difficulties, or otherhave 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’sits budget and may even jeopardize its completion of the project altogether, andaltogether. This could adversely and even materially affect the Company’sour business, its financial condition and results of operations.
The inflow of significant amountsquantities of water into the Dead Sea could adversely affect production at our plants
The inflow of significant amountsquantities 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 Sea mightand may alter the composition of the Dead Sea water, in a manner that would lowerlowers the concentration of sodium chloride (NaCl) in the water, which couldmay adversely affect production at ICL plants.plants, our results of operations financial position, and our business. 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.
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, the Netherlands and the Netherlands.Brazil. 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 ICL plantone of ICL's plants may affect the production capacity and/or production costs at other 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 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 |
The applicable tax rates may increase;
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 situationcondition
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 iswe are 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 therefore. Therefore, this may adversely affect our financial results. For further information, see Note 2 to our Audited Financial Statements.
Regarding pending legal matters, we are 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, in 2015, a request was filed for certification of a claim as a class action, in the Tel Aviv-Jaffa District Court, against eleven defendants, including a subsidiary, Fertilizers and Chemical Ltd., in respect of claims relating to air pollution in Haifa Bay and for the harm allegedly caused by it to residents of the Haifa Bay area. The amount of the claim is about NIS 13.4 billion (about $4.2 billion). In the Company’s estimation, based on the factual material provided to it and the relevant court decision, it is more likely than not that the plaintiffs’ contentions will be rejected.
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. An additional example is estimation of the projected costs for the closure and restoration of the Sallent site as part– the main portion of the estimated costs for closure and restoration solution,is attributed to restoration of the salt pile. The Company is taking action to utilizetreating 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 presentcurrent provision. In the Company’s estimation, the provision in its books reflects the best estimate of the expense required For further information, see Note 17 and 18 to settle this obligation.our Audited Financial Statements.
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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. Considering 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,reporting date, 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 judgment.
The 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 byITA, 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 issue, the result wouldcan be an increase in the company'sCompany's tax liabilities in an aggregate amount of about $100 million for the years 2016-2018.liabilities.
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CFC taxation
The Company estimates that it is more likely than not that its position will be accepted. As at the date of the report, the Company believes that the tax provision in its financial statements represents the best estimate of the tax payment expected to be incurred with reference to the Law.
BEPS and Pillar and 2 proposed arrangements
The base erosionBase Erosion and profit shiftingProfit Shifting (“BEPS”) project and other initiatives like Pillars 1 and 2 undertaken by the Organization for Economic Cooperation and Development (“OECD”) may have adverse consequences to our tax liabilities. The BEPS project contemplatesThese initiatives contemplate changes to numerous international tax principles, as well as national tax incentives and theseenforce other arrangements like minimum effective tax liability. These changes, when adopted by individual countries, could adversely affect our provision for income taxes. Countries have only recently begun to translatebeen translating the BEPS recommendations into specific national tax laws, and itare expected to do so also with respect to Pillar 1 and 2, while in the EU, Pillar 2 is expected to be effective as early as of FY 2023. It remains difficult to predict the magnitude of the effect of such new rules on our financial results.
We have expanded our business throughby mergers and acquisitions, oras well as by 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 issuance of equity securities, the incurrence of debt and contingent liabilities, including liabilities for environmental damage caused by acquired businesses prior to or after the date 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.
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. InFor example, at ICL Iberia, our subsidiary in Spain, we are consolidating allconsolidated our two existing mines and processing facilities into one complex which operates via a single site which includesramp instead of a mineshaft. The sites consolidation and a processing plant, which would reduce coststhe ramp project are expected to increase our production capacity to an expected annual running rate of approximately 1 million tons by the second half of 2022, while lowering cost per ton, and allow forto reach a level of up to about 1.3 million tons per year in the eliminationfuture, following completion of additional bottlenecks and further expansion. In ICL Boulby we have made a transition from thenecessary adjustments in surface 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 field of specialty phosphate solution, among other things through the construction of a white acid (WPA) facility. These initiatives may involve very high costs and/or take longer than we anticipate and may not be realized and\or ultimately achieve their goals. facilities.
If theseour initiatives will not succeed, our financial situation and results of business and operations, as well as competitive position, could be materially and adversely affected.
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As a multinational 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 that affect our financial results 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,NIS, 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 any developments with respect to the end of LIBOR rate calculations in 2021phase-out period
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 a downgrade in our rating.
Further, a portion of ICL'sour loans bear variable interest rates based on the short‑termshort-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. Apart from our debt instruments, we also use LIBOR for our derivatives, such as currency swaps. 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 (“FCA”) (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 calculatingIn March 2021, the IBA released the LIBOR will be established suchcessation statement, pursuant to which the IBA publicly announced that it continuesintends to exist after 2021. The U.S. Federal Reserve, in conjunctioncease publication of euro, sterling, Swiss franc and Japanese yen and 1 week and 2-month USD LIBOR settings on December 31, 2021, and the remaining USD LIBOR settings on June 30, 2023. In addition, the FCA provided that starting January 1, 2022, new use of USD LIBOR is banned, subject to limited exceptions. In accordance with recommendations from the Alternative Reference Rates Committee, is considering replacing U.S. dollar LIBOR is currently being replaced with the Secured Overnight Financing Rate (“SOFR”), a newly creatednew index calculated with a broad setthat measures the cost of short-term repurchase agreementsborrowing cash overnight, backed by treasuryU.S. Treasury securities. ItGiven that SOFR is a secured rate backed by government securities, it is a rate that does not possibletake into account bank credit risk (as is the case with LIBOR). SOFR is therefore likely to predictbe lower than LIBOR and is less likely to correlate with the effectfunding costs of financial institutions. As a result, parties may seek to adjust the spreads relative to such reference rate in underlying contractual arrangements. These reforms may cause existing loan agreements using LIBOR to perform differently than in the past or to disappear entirely. The consequences of these changes, other reforms or the establishment of alternative reference ratesdevelopments with respect to LIBOR cannot be entirely predicted but may result in the US or elsewhere.level of interest payments on the portion of our indebtedness that bears interest at variable rates to be affected, which may adversely impact the amount of our interest payments under such debt. 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”.
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In anticipation of LIBOR’s phase-out, we initiated preliminary discussions with our lenders to negotiate a replacement benchmark for LIBOR. There can be no assurance that we will be able to reach any agreement on a replacement benchmark, and there can be no assurance that any agreement we reach will result in effective interest rates at least as favorable to us as our current effective interest rates. The failure to reach an agreement on a replacement benchmark, or the failure to reach an agreement that results in an effective interest rate at least as favorable to us as our current effective interest rates, could result in a significant increase in our debt service obligations, which could adversely affect our financial condition and results of operations. In addition, the overall financing market may be disrupted as a result of the phase-out or replacement of LIBOR, which could have an adverse impact on our ability to refinance, reprice or amend our existing loans, or incur additional indebtedness on favorable terms or at all.
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.
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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
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.19
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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,the complexity and the global reach of our businesses each of which could constitute a significant stand-alone company,and their global reach, 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
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 failureFailure to comply with thesefinancial 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.
In September 2021, the Company entered into a new sustainability linked loan (SLL) agreement, which includes sustainability performance targets. Any failure to comply with these targets may result in penalties and impede our efforts to raise funds, which may not be available to us on favorable terms or at all, especially as such loans become increasingly common.
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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 emerging markets in which 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 priceprices 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 amountnumber of agricultural crops and, as a result, sales of our fertilizer products. Generally, reductions in agricultural subsidiesto 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 wholeentire year.
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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
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.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.
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 NIS 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.
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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.
Securing the future of our phosphate mining operations at Rotem Israel depends on obtaining several approvals and permits from the authorities in Israel
Securing the future of our phosphate mining operations at Rotem Israel depends on obtaining several approvals and permits from the authorities in Israel, as follows:
Emissions permit under the Israeli Clean Air Act (hereinafter - the Law): In June 2021, the Company's emission permit was renewed by the Israeli Ministry of Environmental Protection (MoEP), until September 2023. The renewed permit reflects an updated outline of requirements. Postponement in the execution of a limited number of projects was granted within the framework of an administrative order under Section 45 of the Law, received in July 2021. Management still expects difficulties in meeting the execution schedules of a limited number of projects and accordingly continues to work with the MoEP to find a satisfactory solution regarding the timing of the investments, taking into account the impact of uncertainty surrounding Rotem Israel's activity, as far as the implementation of long-term projects is concerned.
Oron's lease agreement - The Company has been working to extend the lease agreement for Oron's plant area since 2017 by exercising the extension option provided in the agreement.
Phosphogypsum storage - In October 2021, a new Urban Building Plan was approved, the main objectives of which are to regulate areas for phosphogypsum storage reservoirs. According to the new Plan, the Company is required to obtain building permits involving permit fees. Due to the ambiguity of the guidelines regarding the fee's calculation, there is a difficulty in estimating the future required outflows.
| • | Energy production – In order to ensure the continuity of energy production in Rotem Israel, and in accordance with the policy of the Ministry of Energy and the Ministry of Environmental Protection, the Company is working to accelerate the completion of a project to replace existing energy production infrastructure at Rotem, which utilizes oil shale, with a natural gas-based steam boiler, so it will be completed before the existing mined reserves of oil shale are utilized. |
| • | Finding economically feasible alternatives for continued mining of phosphate rock in Israel – According to the Company's assessment of economic phosphate reserves in the existing mining areas and the estimated useful life of Rotem's phosphate rock reserves, which are essential for its production, is limited to only a few years. The Company is working to obtain permits and approvals which will provide an economic alternative for future mining of phosphate rock in Israel. |
The Company is continuing its discussions with the relevant authorities, in order that the required approvals, permits and future phosphate rock resources are granted. The Company estimates that it is more likely than not that the said approvals, permits and future phosphate rock resources will be granted within a timeframe that 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 resources 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.
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Our operations are subject to a crisis in the financial markets.markets
The decision by British voters to exituncertainty surrounding the withdrawal of the United Kingdom from the European Union may materially and adversely affect our business.business
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As a chemical industryleading global specialty minerals company, we are inherently, and by the nature of our activity,activities means that we are inherently exposed to hazards relating to materials, processes, production and mining.mining
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.period. 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”.
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 that we take special precautionary measures to maintain a safe and healthy work environment. To ensure the safety of workers and others in the Company's facilities, we are 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 to implement, or a 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“.
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As an industrial chemicalsa leading global specialty minerals company, we are exposed to various legislative, regulatory 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 industryleading global specialty minerals 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 asand compliance with standardization requirements, have all shown a significant upward trend. For example, in Israel, emission permits are issued 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. Failure to comply with these requirements may have an adverse effect on our operations, business and results of operations.
Legislative and regulatory changes around the world may prohibit or restrict the use of our products, due to environmental protection, or health orand 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 permitslicenses is not certain and may be made contingent on additional conditions and significant costs. Difficulties in obtaining such licenses could have an adverse effect on our operations, business and results of operations. For example,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 orderIsrael” above, “Item 4 – Information on the Company — B. Business Overview —Regulatory and Environmental, Health and Safety Matters”, “B. Business Overview —Business Licenses and Other Permits” and Note 18 to comply withour Audited Financial Statements.
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 few years, climate change and GHG emissions have been of increasing concern worldwide. Current and future legislation and regulations governing climate change and GHG emissions are transition risks in the short term and beyond. Carbon taxes and cap-and-trade-emissions schemes are increasingly viewed in global jurisdictions as a way of pricing carbon – a key policy driver for GHG emissions reductions. These policies and regulatory levers will increasingly result in additional financial costs to the Company, which may lead to a material impact on the Company's business, financial position and results. Currently, this risk impacts two of ICL Europe's sites, ICL Iberia is affected as a participant in the EU-ETS Emissions Trading System and ICL Boulby become subject to the UK Emissions Trading Scheme as of January 1, 2021.
There is considerable uncertainty over the future cost of allowances and the manner in which they will be allocated. Revisions to the EU ETS published in 2021 also include proposals for the introduction of a Carbon Border Adjustment Mechanism (CBAM), designed to prevent carbon leakage from the EU. The UK Government is considering implementing a similar mechanism. Both of these financial instruments will increase the purchase price that our customers will need to pay for our products. In Israel, a new carbon tax is planned for implementation in 2023. China also initiated a national emission permits receivedtrading scheme in connection with2017. YPH in China, is one of the Company's largest production sites but currently, this trading scheme does not include the business sector relevant to this site. However, the existing range of business sectors is likely to expand in the future. There has not been an indication of upcoming carbon taxes/trading schemes in the US states where ICL operates, but this too could change in the future, as concerns regarding climate change increase. Consequently, it is expected that, in the short-term, ICL will need to purchase more carbon allowances at higher prices through these specific programs than we have done historically. At the same time, we also anticipate we will incur additional capital costs for energy and emissions reduction measures as carbon taxes increase the costs of supplied materials in the ICL value chain.
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In addition to legislative, regulatory, business and market impacts related to climate change, there may also be significant physical effects of climate change. These effects nay result in both ‘acute’, short term events and chronic, longer term impacts including changes in weather patterns, such as, water shortages or changes in water quality, changes to sea and temperature levels, increases in the intensity of storms, changes in availability of natural resources and damage to facilities or equipment some of which have been experienced at ICL facilities.
Physical risks have the potential to financially disrupt operations, upstream raw material supply and downstream distribution of our products to our customers. Climate change is expected to increase the frequency and likelihood of acute, 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 example indicating the beginning of a chronic change is the low water levels in the Rhine River in Germany, a key transport route, which in 2018, experienced water levels too low for transport barges to operate, The ICL Ludwigshafen site, which is located on the banks of the Rhine river, may be affected as it uses freight boats to carry phosphate rock into the site and phosphate fertilizers produced at the site to customers. An increase of these occurrences may be attributable to climate change.
The potential impact of climate change and associated laws and regulations on the Company's operations in Israel, we are requiredand business, and those of our customers and suppliers, is uncertain. The cost of adjustment to make significant capital investment overand compliance with legislative and regulatory changes regarding climate change and GHG emissions, and adjustments to the next few years. See “Itemphysical impacts of climate change, could materially and adversely affect our business, financial condition and results of operation. Apart from implementing physical measures to deal with extreme weather conditions, ICL has acquired insurance to provide some degree of protection from some financial losses resulting from 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,operations, 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’sthis 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 areof our facilities conducted by enforcement authorities.authorities may result in administrative and legal proceedings.
Furthermore, from time to time we are exposed to claims alleging physical or property damage which may cause us financial harm.
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Some of theour manufacturing or marketing activities (and sometimes transportation and storage as well) entail safety risks that we attempt to minimize but are not ableunable 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.
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 situationcondition 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.
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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’sOur Operations in Israel and/or to the Company being an Israeli companyCompany
Due to our location in Israel and/or being an Israeli 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.
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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 placeoccurred 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, 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.
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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.
We are incorporated under Israeli law. The rights and responsibilities of the holders of our ordinary shares are governed by our Articles of Association and Israeli law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in typical U.S. corporations. In particular, a shareholder of an Israeli company has a duty to act in good faith toward the company and other shareholders and to refrain from abusing its power in the company, including, among other things, in voting at the general meeting of shareholders on matters such as amendments to a company’s articles of association, increases in a company’s authorized share capital, mergers and acquisitions and interested party transactions requiring shareholder approval. In addition, a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or to appoint or prevent the appointment of a director or executive officer in the company has a duty of fairness toward the company. There is limited case law available to assist us in understanding the implications of these provisions that govern shareholders’ actions.
These provisions may be interpreted to impose additional obligations and liabilities on holders of our ordinary shares that are not typically imposed on shareholders of U.S. corporations.
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 company 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,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 usICL 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.
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Risks Related to Our Ordinary Shares
We have one key shareholder who is our controlling shareholder. This controlling shareholder may influence thedecision making of decisions with which other shareholders may disagree
As atof December 31, 2018,2021, 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:
| 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 |
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 beenwas established, 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 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 on the Company, if any, but it is possible that the introduction of an additional array of regulatory provisions, coupled with strict enforcement, may increase the uncertainty in the management of 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.operations.
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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.
As at the date of this Annual Report, we have approximately 181173 million ILSNIS 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 thea reduction in the percentage ownership.
For example, as at the date of the report, there are about 18.912 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”. Any ordinary shares that we issue, including under any option plans, would dilute the percentage ownership held by investors.Ownership.
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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.program.
Our ordinary shares are traded on different markets which may result in price variations
Our ordinary shares have been traded on the TASETel Aviv Stock Exchange (TASE) since 1992 and have been listed on the NYSENew York Stock Exchange (NYSE) since September 2014. Trading in our ordinary shares on these markets occurs in different currencies (U.S. dollars on the NYSE and ILSNIS on the TASE) and takes placeoccurs 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 operationsRevenues below seasonal norms 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.operations due to the mix of products we sell and the different countries in which we operate. 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 toIn the mixpast year, the COVID epidemic flattened seasonality and we are witnessing changes in seasonal patterns which are reflected in high off-season demand as a result of products we sell in those quarters, as well asgovernments’ food security strategies and the mix of sales in different countries.like, which increases uncertainty regarding future seasonality fluctuations. 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 quartersperiods and our annual results of operations may not meet expectations. If this occurs, the market price of our ordinary shares could decline.
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Item4 – INFORMATIONINFORMAION ON THE COMPANY
A. HISTORY AND DEVELOPMENT OF THE COMPANY
Our legal name is Israel ChemicalsICL Group Ltd. and our commercial name is ICL. We are a public company and operate today as a limited liability company under the laws of Israel. Our registered 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.
The Company is subject to certain of the informational filing requirements of the Exchange Act.Since the Company is a “foreign private issuer”, it is exempt from the rules and regulations underthe Exchange Act prescribing the furnishing and content of proxy statements, and the officers,directors and principal shareholders of the Company are exempt from the reporting and“short-swing” profit recovery provisions contained in Section 16 of the Exchange Act with respectto their purchase and sale of Ordinary Shares. In addition, the Company is not required to filereports and financial statements with the SEC as frequently or as promptly as U.S. publiccompanies whose securities are registered under the Exchange Act. However, the Company isrequired to file with the SEC an Annual Report on Form 20-F containing financial statementsaudited by an independent registered public accounting firm. The SEC also maintains a website athttp://www.sec.gov that contains reports and other information that the Company files with orfurnishes electronically to the SEC.
ICL was established in Israel in 1968 as a government-owned and -operated company in Israel and operates today as a limited liability company 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 of Israel published its tender prospectus, 20% of the Company's shares were sold to the public and its shares were registered for trading on the Tel‑Aviv Stock Exchange.Exchange (TASE). Prior to our public share issuance, a Special State Share in our Companycompany 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 StateShare”). 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 Companycompany on the TASE (ILCO), which was controlled at that time by the Eisenberg family. A majority of the ordinary shares, held by the stateState of Israel, were sold during the following years. In 1999, the Ofer Group acquired the Eisenberg family’s shares in Israel Corporation. In 2000, the State of Israel ceased to be a stakeholder in terms of holding any of our ordinary shares, but it retained theits Special State Share. In 1999, the Ofer Group acquired the Eisenberg family’s shares in Israel Corporation.Share 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, 2018,2021, Israel Corporation Ltd. holds approximately 45%44.76% of our outstanding ordinary shares and approximately 45.87%45.62% of the shareholders' voting rights.
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The following is a list of significant acquisitions divestitures and joint venturesdivestitures over the last several years:
In January 2021, we completed the acquisition of Agro Fertiláqua Participações S.A., one of Brazil's leading specialty plant nutrition companies, and in July 2021, we acquired the South American Plant Nutrition business of Compass Minerals América do Sul S.A. (hereinafter - ADS).
In July 2021, we completed the sale of Jiaxing ICL Chemical Co. Ltd (ICL Zhapu), which was part of our Industrial Products segment to China Sanjiang Fine Chemicals Company Limited.
In May 2020, we completed the sale of Hagesüd Interspice Gewürzwerke GmbH, including related real-estate assets, to Solina Corporate SAS.
In |
In March 2018, we completed the sale of our fire safety and oil additives businesses, for $1,010 million.
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”Expenditures”.
B. BUSINESS OVERVIEW
Company Overview
ICL Group Ltd. is a leading global specialty minerals company. The Company creates impactful solutions for humanity’s sustainability challenges in global food, agriculture and chemicals company operatingindustrial markets. The Company 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. The Company’s 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). |
A unique integrated phosphate value chain that extends from phosphate rock mines in Israel and in China to |
Polysulphate® resources in the United Kingdom.
A focused and highly experienced team of technical experts that develop 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.
The acquisitions of Fertiláqua and ADS have helped position ICL as the leading specialty plant nutrition company in Brazil.
For the year ended December 31, 2018,2021, we generated total sales of $5,556$6,955 million, operating income of $1,519$1,210 million, adjusted operating income of $753$1,194 million, net income attributable to the shareholders of the companyCompany of $1,240$783 million and adjusted net income attributable to the shareholders of the companyCompany of $477$824 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 by the Industrial Products segment amountedtotaled to $1,296 $1,617million and the operating incomeprofit attributable to the segment amountedtotaled to $350 $435million, sales ofby the Potash segment amountedtotaled to $1,623 $1,931million and the operating incomeprofit attributable to the segment amountedtotaled to $393 $399million, sales ofby the Phosphate Solutions segment amountedtotaled to $2,099 $2,432million and the operating incomeprofit attributable to the segment amountedtotaled to $208 $307million, and sales of the Innovative Ag Solutions segment amountedtotaled to $741 $1,245million and the operating incomeprofit attributable to the segment amountedtotaled to $57 $121million.
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”.
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Markets and Industries
General
Our Industries
Our Industrial Products segment includes mainlyprimarily operates the bromine value chain, (elementalwhich includes elemental bromine and bromine compounds for various industrial applications) as well asapplications. This segment also operates several complementary businesses, mainly phosphorous based compounds (mostlyphosphorous-based flame retardants)retardants and additional Dead Sea minerals for the pharma,pharmaceutical, food, oil &and gas, and de-icing industries.
The Potash segment is based onoperates our potash value chain and includes mainlyprimarily potash fertilizers, as well as polysulphate-based fertilizers for the agriculture market.Polysulphate®-based fertilizers. The segmentsmagnesium business, a byproduct of potash production, is also includes the magnesium activity. reported under this segment.
The Phosphate Solutions segment is mostlyprimarily based on ICL'sour phosphate value chain. It includes specialty phosphate salts and acids for various food and industrial applications, as well as commodity phosphates, which are used mostlymainly 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 theour specialty fertilizers business. We are focused on expanding and strengthening our Innovative Ag Solutions offerings, by maximizing its existing capabilities and agronomic expertise. Our stated strategy calls for expansion and global diversification through opportunistic M&A and, accordingly in 2021, we completed the acquisitions of Fertiláqua, a Brazilian specialty crop nutrition company, and the South American Plant Nutrition business but also functionsfrom Compass Minerals (now known as ICL's innovative arm, focusing on R&DICL America do Sul or ADS). Both acquisitions have helped position ICL as the leading specialty plant nutrition company in Brazil and digital innovation. ICL aims to achieve leadership position in specialty fertilizers through portfolio enhancement and geographic expansion, potentially including bolt-on M&A.
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Industrial and Food Markets
Industrial Products
Bromine, a member of the halogen family, is found naturally in seawater, underground brine deposits and other water reservoirs, such as the Dead Sea. Bromine concentration and extraction methods vary depending upon the source. The lower the concentration of bromine in the brines, the more difficult and expensive it is to extract. The Dead Sea, which spans Israel and Jordan, is the world’s premier source of bromine and accounts for approximately half of global supply. The Dead Sea is also the most competitive source of bromine, as it has the highest concentration, which means the least amount of water must be extracted and evaporated to produce bromine, resulting in lower energy costs.
ICL's bromine solutions are embeddedfound in numerous products makingand make 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, and furniture and textiles end-markets. Bromine and its derivatives are also used in various other industrial applications, including rubber production, oil and gas drilling, water purification, and in the pharmaceutical and food industries.
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Demand for the products manufactured by ICLour Industrial Products which mainly include solutions based on bromine and phosphorus,segment is driven by population growth, increasedimproved standards of living, highergreater environmental and safety awareness, and an 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.production. Increased regulation and environmental awareness also drive demand for flame retardants including polymeric and reactive bromine and phosphorus-based flame retardants, bromine‑based biocides for water treatment, bromine, magnesiawhich are considered more environmentally friendly. Despite strong demand patterns in 2021 – driven by the post COVID-19 industrial impact, tight supply and potassium chloride‑based intermediates for the pharmaceutical industry and oil additive solutions.related supply chain challenges - ICL estimates thatlong-term bromine demand is relatively stable and expects market growth isto be primarily linked to global population growth. On the above-mentioned market drivers.
The supply side has tightened, as Chinese supply is in a downward trendproducers have significantly decreased their bromine production over the past few years, due to resource depletion, and increased environmental-related regulatory pressure, in China.and the reduced availability of land for bromine production. This togethershift, combined with a shortage of economically viable bromine resources globally, resulthas resulted in aprice increases related to tight supply‑demand balancesupply and price increases.demand.
Specialty Phosphates
In the food industry, phosphate salts are used as functional food ingredients and provide texture and stability solutions for the processed meat, poultry, seafood, dairy, beverage, and bakery industries. On the industrial side, ICL's phosphoric acidsspecialty phosphates are found in water and salts serve many industries such asmetal treatment supplies, cleaning and construction materials, cola beverages, water treatment, cleaning materials,oral care, 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.more.
According to ICL'sour estimates, the Company hasICL holds a leading position in specialty phosphates in Europe, North America and Latin America. According to CRU's estimates from September 2018,America, with approximately 24% market share in total. Additionally, 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, demandkey raw material for water soluble fertilizers of which purified phosphoric acid- is a major raw material, has been growing sharply,expected to continue to increase, driven by rapid growth in fruit &and vegetable consumption and changing agricultural production systems. PhosphateSimilarly, phosphate salts – used in processed meats, cheeses and bakingbaked goods – have seen strongincreased consumption growth in developing countries. At the same time, there are several capacity expansions on the horizon, these are likely to be almost entirely offset by expected closures of TPA (thermal phosphoric acid) plants in China.
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Consumer demand for different food products has changed dramatically over the lastpast several decades, driven by increasedhigher 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, resulthave resulted in growing demand for more sophisticated, protein-enriched, unprocessed (“clean label”)(clean label) and non-allergenic (“free from”)(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 asdrive long‑term drivers of demand for food additives, such as phosphate derivatives and phosphate and protein containing formulationsformulations.
For 2022, we expect to increase our food-grade WPA production at our YPH in China, in order to serve local food and hygiene products forindustrial applications markets. We also expect to increase our battery grade MAPsales to the processed meat, bakery, dairy and beverages industries.rapidly growing lithium iron phosphate (LFP) battery market in China.
Agriculture Markets
Our potash and phosphate commodity fertilizers, FertilizerpluS and specialty fertilizers businesses serve agriculture markets worldwide.
Fertilizers serve an important role in global agriculture by providing vital nutrients to increase both the crop yield and quality. Nitrogen, phosphorus and potassium (N, P and K) constitute the three major nutrients required for plant growth, and 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 can 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 and helps crops achieve their growth potential. Potassium and phosphorus are vital for the plant’s physiological processes, including strengthening cereal stalks, stimulating root development, promoting leaf and fruit health, and accelerating the growth rate of crops. 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 products in storage and transportation, thereby prolonging shelf life.
Short term demand for fertilizers is volatile and seasonal and affected by factors, such as the 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 various countries’ government subsidies and environmental regulations or by the lines of credit granted to farmers or to producers of agriculture inputs. In addition, currency exchange rates, legislation and international trade policies have an impact on the supply, demand and level of consumption of fertilizers worldwide. Nevertheless, the common perception, reinforced by the 2020 outbreak of COVID -19, is that the policy of most countries is to ensure an orderly and high-quality supply of food for their population and, to this end, they encourage local agricultural production. To achieve this goal, most countries classified the fertilizer industry as essential, excluding it from Covid-19 restrictions and lockdowns. Therefore, we expect the long-term growth trend in the fertilizers market will be maintained.
Global fertilizer demand is also driven mainly by the supply/demand balance in respect offor 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:
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Population and Income Growth per Capita. Historically, growth in global fertilizer consumption globally has been closely correlated withto the growth inof the world’s population, which is expected to increase by over 2.0grow from 7.8 billion andin 2021 to reach 9.89.7 billion by 2050, according to the FAO (FoodFood and Agriculture Organization of the UN)UN (FAO). 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, thusas a result, fertilizer use. In addition, growth in income per capita in developing markets resultsis resulting 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 (InternationalInternational Monetary Fund)Fund (IMF), GDP per capita in emerging markets and developing economies (current prices) is expected to grow by 3.3%7.2% and 6.5%6.4% in 20192022 and 2020, respectively.2023, respectively.
Declining Arable Land per Capita. As the world’s population grows, mainly in cities, farmland per capita decreases and more food production is requiredneeded from each acre of farmland. This, in turn,farmland, which requires increased yield per planted area. According toBased on data provided by the FAO, the amount of arable land per capita is expected to decrease from 0.220.21 hectares per person to 0.170.18 hectares per person between 20142022 and 2050. Effectively, newNew arable land is available only in limited quantities and is concentrated mainly in Brazil. Therefore, the only viable path to increaseincreased crop production is through a yield increase in existing farms in developing countries,regions – mainly in China, India, Russia, Africa and Central America,America. This can be achieved by optimizing the use of fertilizers (especially- especially improving the balance in the use of potash, which is underutilized versus the use of nitrogen fertilizers),fertilizers - together with improved water availability and better seeds. According to the FAO, world crop production will doubleincrease by 23.7% between 20072021 and 2050. 77%2050, with most of the growth is expected to be attributed to increase in yields.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.
Stocks are an important market variable, represent inventories at a point in time, and reflect the balance between supply and demand. The stock-to-use ratio also indicates the level of carryover stock for any given commodity, as a percentage of the total demand or use. High stock-to-use ratios indicate more supply is available, generally leading to lower prices. Conversely, low stock-to-use ratios indicate a tight supply situation and higher prices.This ratio can also be used to indicate whether current and projected stock levels are critical or plentiful. By comparing the current year's stock-to-use ratio with years when carryover stocks were below normal – as well as years when carryover stocks were above normal – will help provide an estimate as to the direction of the price trend, as well as the probable extent of price changes.
During 2018,2021, average prices of corn, soybean and wheat prices increased by 8.4%60.4%, 45.2%, and 19.3%41.1%, respectively, while soybeanthe average price of rice declined by 2%. These increases occurred due to the lingering impact of COVID-19 and ricethe related global concerns regarding food security, especially in China. Good agricultural fundamentals supported the increase in grain prices, decreased by 4.8% and 9.9%, respectively.mainly in Brazil, where farmers faced high barter ratios. The WASDE report, published by the USDA in February 2019January of 2022, further supports the above and showed a decrease in the expected ratio of the global grain inventories of grains to annual consumption, to 29.2% at28.4% for the end of the 2018/192021/22 agriculture year, compared to 31.3% at29.2% for the 2017/182020/21 agriculture year, and 30.6% in30.5% for the 2016/172019/20 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..
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Specialty Agriculture
Specialty Agriculturefertilizer markets 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), which is faster than the conventional fertilizer market. The decrease in arable land per capita due Farmers use specialty fertilizers to population growthmeet the needs of specific crops, soil types and climates, to achieve more efficient and effective fertilization and to maximize yield and quality. Specialty fertilizers allow for more precise application of the increasing pursuit of an improved quality of lifecritical foundations for plant development and are leading to a higher consumption ofgenerally used for specialty crops (such as fruits and vegetables, which are consideredgreenhouses and horticulture), and in recent years, usage has also expanded to larger specialty crops, and supportfield crops. The global increase in the use of more sophisticated fertilizers that will enable higher yields. Increased environmental awarenessdemand for food is also contributingexpected to drive a related increase in the use of specialty fertilizers. These fertilizers (since they resultinclude 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). Other enhanced efficiency fertilizers include liquid fertilizers, integrated in irrigation systems and in herbicides, and fully water-soluble fertilizers, which are most commonly used for fertilization by means of drip irrigation systems and foliar spraying.
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The expected market growth of specialty fertilizers is supported by the following global trends:
The need for an increase in yield and crop quality
Enhanced Efficient Fertilizers,efficiency fertilizers, which include controlled release fertilizers (CRF),CRFs, increase the quality and yield of crops through a more efficient crop uptake of the nutrients. Many specialty-fertilizersspecialty-fertilizer field trials in specific growing regions have already demonstrated the benefits of using new fertilizer technologies. The Enhanced Efficiency Fertilizerstechnologies and, as a result, the enhanced efficiency fertilizers category is rapidly growing globally.globally.
Regulatory pressure and environmental trends
Environmental regulations can impose restrictions on the level of nutrient usage. This results in a movement towards more efficient nutrient solutions, such as Controlled Release Fertilizers (CRFs)CRFs, water-soluble fertilizers or Water Soluble Fertilizers.biostimulants.
New Grower Practices
Grower practices can have a substantial impact on the growth of the Specialty Fertilizersspecialty fertilizers market. Fertigation usage is growing, since applying fertilizers via fertigation systems is much more efficient when using specialty fertilizers, thus increasing the demand for soluble fertilizers such as Water Soluble NPKs.
All of the above factors are expected to contribute to a higheran increase in long-term demand for specialty fertilizer solutions.solutions.
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Competitive Strengths
Unique portfolio of mineral |
Israel
Dead Sea: We benefit from access to the Dead Sea in Israel: ICL’s- one of the world’s most abundant, enduring and cost-efficient sources of potash and brominebromine. The Company’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’s production facilities at the Dead Sea enjoy lower production costs compared to underground potash mining potashoperations or bromine extracted from underground deposits or extracting bromine from less concentrated sources. This is attributed to theresources with lower mineral concentration. The Dead Sea has high mineral concentration and virtually unlimited supply, of minerals in the Dead Sea and to theICL’s 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)outdoors 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 has a faster time to market, due to the geographic proximity of its facilities in Israel to seaports and dueIsrael’s location to Israel’s geographic positioning vis‑à‑vis its main geographical markets (especially- especially the fast‑rapidly‑growing markets of India, China and Brazil).Brazil. While ICL benefits from these advantages, it incurs other 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”.
China
We also operate an open-pitopen pit mine in Haikou, (China),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%
The majority of theour phosphate rock producedproduction in China (and Israel) is used internally to manufacture phosphate fertilizers and fertilizer-grade and pure phosphoric acid, with the balance being sold to third parties. ICL’sOur phosphate assets are the base for itsof our vast and diversified specialty phosphates product portfolio and are used in industrial applications, as well as food additives and specialty fertilizers, addingfertilizers. These offerings provide additional value to the commodity businessICL while reducing ICL’sour exposure to the volatility in the commodity markets. See “Item 3 - Key Information— D. Risk Factors— Our miningmineral 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”.
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United Kingdom
We are currently the only global producer of polyhalite, a unique and organic resource used as fertilizer and naturally consisting of potassium, sulfur, calcium and magnesium, which ICL markets under the name Polysulphate. Unlike blended or compound fertilizer, Polysulphate is available in its natural state and is mined, crushed, screened and bagged, with no additional chemical separation or other industrial processes. It is also soluble, easily absorbed and a cost-effective answer to crop nutrition, and has the lowest carbon footprint available globally.
Spain
We hold licenses to mine potash and salts from underground mines with vast resources in Spain. In the first half of 2021, we completed a project to consolidate two existing mines and processing facilities into one complex, which operates via a ramp instead of a shaft. This change has increased the mine’s capacity and is expected to contribute to lower costs. The project also expanded the complex’s processing capacity, along with other improvements, including the construction of a new terminal in the Port of Barcelona, which was completed in early 2020.
Diversification into higher value‑added specialty products |
Leading positions in markets with high barriers to entry |
Most of ICL’sour businesses rely on natural resources, thatwhich are scarce and concentrated in the hands of a few market participants. ICL’s exclusive concessions, intellectual property (unique– including unique knowledge, technologies and patents for various products and applications),applications – and our world‑wide marketing and distribution network, andcombined with high industry start‑up costs for new market entrants, add further significant barriers to entry.entry.
Strategically located production and logistics assets. |
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Strong cash |
Professional expertise and culture of collaboration and determination. |
Our Strategy
Agriculture – We intend to build global leadership by developing and expanding our portfolio of essential minerals that support its specialty downstream activitiesand advanced crop nutrition products, digital solutions and integrated services, enabling farmers to increase yields and provide for the ever-growing nutritional needs of the world. Our growth in agriculture is driven by innovation, investment in increasing capacity and M&A, and it is supported by the increasing demand for organic fertilizers, micronutrients and bio stimulants, focusing on growing markets.
Food – withWe expect to capitalize on the alternative protein market potential, by focusing on food technologies and innovation, and by increasing capacity for food grade solutions. Growth will be achieved both organically and through M&A.
Industrial – We intend to strengthen our global leadership in the bromine market by capitalizing on new market opportunities and by continuing to focus on crop nutritionlonger-term bromine compounds contracts. In addition, growth will be supported through expanded R&D and industrial markets. business development activities for new and sustainable bromine applications.
Our Company’s integrated business model creates significant operational synergies, which are derive from the combination of our attractive assets and broad value‑added solutions. Over the years, we have developed a balanced portfolio that supportsto support long‑term stability and growth.
ICL launched its “Business CultureGroup Limited 51
To drive internal commercial synergies, optimize the distribution of Leadership” strategy, focused on enhancing market leadership across its three core mineral value chains of bromine, potashour commodity, specialty and phosphate, as well as realizingsemi-specialty fertilizers, and in order to better realize the growth potential of Innovative Ag Solutions. Toour crop nutrition business, we consolidated our crop nutrition sales and marketing infrastructure in 2020, This has created a unified commercial-facing platform for agriculture end-markets. This new operating model, which is managed on a regional basis, serves to enable us to achieve commercial excellence, increase the efficiency of our global operations and better align the organization with this strategy, ICL Realigned the company into four business divisions: Industrial Products (bromine), Potash, Phosphate Solutionsleverage region-specific knowledge, agronomic and Innovative Ag Solutions.R&D capabilities, logistical assets, and customer relationships.
Industrial Products
ICL’s global leadership in the bromine industry is driven by itsour focus on delivering value to itsour customers rather than increasing volume. ICL isWe are able to generate more value by leveraging itsour unique assets and know-how and by fosteringknow-how. The Company also employs targeted innovation, throughfor the development of new applications, such as new bromine and phosphorus-based flame retardants, magnesia and salt products, as well as other solutions. ICL continues to leverage its unique logistical advantages and unparalleled experience related to the safety and environmental aspects of its bromine business. Following strategic long-term contracts signed during 2019, the segment has built new compound facilities to increase its production capacity, mainly for TBBA. The new TBBA facility has been running in full capacity since the beginning of 2021.
Potash
ICL leverages its well-positioned and unique potash assets, as well as itsour logistical advantages, to be among the three most competitive suppliers in itsour key target markets, including Brazil, Europe, India, South-East Asia and China. ICL’sOur cost competitiveness is driven by itsthe Company’s lower logistics costs due to itsour facilities’ proximity to both ports and customers, as well as bycustomers. The Company also strives to continuous optimization of its potash production processes and capacity potential at ICL Dead Sea and ICL Iberia reducing(through the consolidation of sites and the completion of the ramp connecting the Cabanassas mine with the Suria plant), to reduce costs and efficientlyincrease efficiency utilizing its capacity potential. At ICL Boulby,, the Company has shifted towardsfocuses on ramping‑up the production of Polysulphate becomingand developing the market for this unique fertilizer as the world's first and sole supplier of this new and unique fertilizer.supplier. ICL also continues to enhance its competitive production of Magnesium andstrives to optimize synergies of producing magnesium with its potash and bromine operations at the Dead Sea.
Phosphate Solutions
ICL is a global leader in providing phosphate basedphosphate-based solutions to the Industrial, Foodindustrial, food and Agriculture end markets. ICL’sagriculture end-markets. Our strategy is to continue to outgrowgrow in these markets by increasingly focusingincreasing our focus on specialty phosphate solutions, and further promoting commercial excellence and value-based product positioning, while enhancing customer relationships. Leveraging on itsrelationships, and leveraging our backward integration tointo the phosphate resources of ICL Rotem in Israel and YPH in China, ICL willand our extensive know-how and innovation capabilities. We continue optimizing itsto optimize our production capabilities to support the growth and margin expansion of itsour specialty phosphate products and solutions. During 2021, we entered the fast-growing Electric Vehicles (EV) market segment through the sale of phosphate-based raw materials for the production of lithium iron phosphate LFP batteries in China and we expect to grow this business in the coming years by increasing production capacity, adding global R&D collaborations and by developing additional innovative solutions. On December 2, 2021, ICL opened a new 10,000-square-foot alternative-protein production facility in St. Louis, Missouri. At full capacity, the new facility will produce more than 15 million pounds of plant-based meat substitute for use by food companies, food-service distributors, restaurants and grocery chains.
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Innovative Ag Solutions
ICL is strivingstrives to create global leadership for Innovative Ag solutions by enhancing its global positions in its core markets of Specialty Agriculture, Ornamental Horticulture, Turfspecialty agriculture, ornamental horticulture, turf and Landscaping,landscaping, by targeting high growth markets such as Latin America, India and China. By leveraging itsWe leverage our unique R&D capabilities as well as seekingand seek M&A opportunities, ICL is workingas we work to expand itsour broad product portfolio of Controlled Release Fertilizersspecialty plant nutrition products, including controlled release fertilizers (CRF), Water Soluble Fertilizerswater soluble fertilizers (WSF), Liquid Fertilizers, Slow Release Fertilizersliquid fertilizers, slow-release fertilizers (SRF), straights (MAP/MKP/PeKacid), organic fertilizers, micronutrients, biostimulants, soil conditioners, adjuvants, seed treatment and Straights (MAP/MKP/Pekacid),growing media, to further boostdrive additional growth. ICL isWe are also developing a service portfolio focused on creating global and regional Agro-professionalagri-professional based solutions, by leveraging digital innovation.
As part of the Company's strategy to grow its specialty plant nutrition business organically and through M&A, in 2021, we completed the acquisitions of Fertiláqua, a Brazilian specialty plant nutrition company, and the South American Plant Nutrition business from Compass Minerals (ADS). Both acquisitions helped position ICL as the leading specialty plant nutrition company in Brazil.
Culture
ICL fosters a “Business’Business Culture of Leadership”Leadership‘, which focuses on business leadership, by creating a leading and sustainable work environment, with a strong commitment to all stakeholders. Culture at ICL, means placing safety as the company’sCompany’s top priority and making every effort and investment to achieve toptop-tier safety results. Culture at ICL, also means operating with a clear commitment to the environment, even beyond regulatory compliance. ICL strivesWe strive to be an “employerEmployer of choice”Choice by strengthening the company’sCompany’s value proposition to employees and by promoting ICL’s core values. ICLWe also fostersfoster an innovation-driven culture that, which leverages itsour technology and know-how, to better serve itsour customers and increase their loyalty. To ensure we live up to our values, culture at ICL also means accountability, transparency and top-tier corporate governance.
Innovation
As part of our strategic focus to enhance customer value through innovation, we are developing a service portfolio focused on creating global and regional agri-professional based solutions, by leveraging digital innovation.
In 2021, we established Agmatix, an agro-informatics start-up that creates data-driven solutions for ag professionals worldwide. Agmatix has developed a cutting-edge platform that uses agronomy data science and advanced AI technology to convert agronomic data into actionable insights at the field level. Agmatix aims to compensate the challenge of data standardization in order to dramatically increase crop yield, and quality, and to promote sustainable agriculture.
In July 2021, we launched ‘ICL Planet Startup Hub’, a foodTech and agriTech accelerator, aimed at offering ICL’s knowledge, experience, market access, and resources to startups operating within and adjacent to ICL’s core areas of expertise. ICL Planet Startup Hub’s first investment was a $1 million series A investment in Protera, an AI-driven start-up designing and developing new proteins and providing for a wide range of plant-based sustainable solutions to the alternative protein market.
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As part of our effort to expand our global Food Specialties portfolio and to focus the development of healthier and more sustainable food products, the Company launched a new alternative-protein fiber production facility in St. Louis in December 2021. The facility will produce plant-based protein fibers to be used in the production of meat substitute products sold by food companies, food-service distributors, restaurants and grocery chains
During 2021, we also expanded our specialty products offerings by producing a mono ammonium phosphate battery grade MAP solution for the production of LFP batteries, destined for electric vehicles and other energy storage uses. The Company also collaborates with research and academic institutes to advance LFP technology.
In February 2020, ICL acquired Growers Holdings, Inc. ('Growers'), an innovator in the field of process and data-driven farming, to help further enhance our digital service offerings and accelerate our global development roadmap. The Growers platform collects and structures manual and machine-generated farm data, instantly creating agile and return-focused plans for planting, fertilization and purchasing decisions.
Our strong commitment to foster an innovation-driven culture is also reflected by the establishment of an internal innovation accelerator, designed "Business Innovation for Growth" (BIG), aimed to optimally leverage the experience, knowledge and ingenuity of our approximately 12,000 employees worldwide. This integrated ideation platform also provides a structured evaluation process, professional support and resources for developing the ideas raised by employees and enables them to create a meaningful business impact. Since the program’s launch in January 2020, ICL employees submitted more than 3,000 ideas across various areas of ICL’s businesses, including new applications and products, production optimization and debottlenecking, implementation of Industry 4.0 technologies, introduction of new business models, service improvement and enhancement, supply chain optimization, digitalization of manual business processes, adoption of more sustainable production and operational process, sustainable products development and waste to product projects and much more. Out of the ideas submitted to date, more than 930 have become fully funded projects, of which nearly 600 were completed by the end of 2021. These projects have made an outstanding contribution to ICL's current and future profits, as well as to many other aspects of the Company’s business, including commercial and service excellence, operational excellence, suitability, safety, employee satisfaction and other qualitative aspects.
Capital Structure
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Segment Information
ICL is a leading multinational companyCompany that operates mainly in the areas of fertilizers and specialty chemicals,minerals, through four segments – Industrial Products, Potash, Phosphate Solutions and Innovative Ag Solutions.
Industrial Products Segment
In 2018,2021, the total sales of the Industrial Products segment totaled $1,296$1,617 million constituting approximately 23% of ICL’s total sales (including sales to other segments), an increase of 9%29% compared to 2017 Sales.2020. Sales by the Industrial Products segment constitute approximately 23% of ICL’s total sales, a decrease of 2% compared to 2020. The segmentsegment's operating profitincome totaled $350$435 million, constituting 35%an increase of the total44% compared to 2020. The Industrial Products segment's operating profit attributableincome constituted approximately 36% of ICL’s adjusted operating income, a decrease of 23% compared to the segments.2020. For additionalfurther information see "Item 3 – Key Information – A. Selected Financial Data – Adjusted to reported operating and net income (non-GAAP financial measures)" and “Item 5 - Operating and Financial Review and Prospects— A. Operating Results— Results of Operations”.
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Products
Industrial Products focuses on three main sub-business lines:
Flame retardants – bromine,Bromine, phosphorus and magnesium-based flame retardants are used in electronics, building and construction, automotive, textile and furnishing applications. Flame retardants are added to plastics, textiles and other combustible materials to inhibitprevent or delayinhibit fire or flames and to prevent the spread of fire.
Industrial solutions – elementalElemental bromine, has a range of uses in the chemical industry, while bromine compounds and phosphorousphosphorus compounds are used in a number of industries worldwide, such as: rubber, pharmaceuticals, electricity, agro and polyester (in production of plastic fabrics and bottles). Clear brine fluids are used for balancing pressure in the oil and gas drilling industry. In addition, this sub-business line includes bromine‑Bromine‑based biocides are used for treating industrial water.
Specialty minerals – specialtySpecialty minerals include magnesia, calcium carbonate and salt products. The main applications of magnesia products are fooddietary supplements and pharma, oil and fuel additives, catalysts and many other small applications. The calcium carbonate main applications are dietary supplements and pharma. The salts include sodium chloride, magnesium chloride and KCl which are mainly used for the food industry, deicing (MgCl2)(MgCl2) and various industrial applications. Due to the uniqueness and high quality/purity of our products, most of our sales are to niche markets.
The following table sets forth the principal products of the Industrial Products segment,, as well as their primary applications and end‑markets:
| Sub-business line | Product | Primary Applications | Primary End‑Markets |
| Flame retardants | Bromine-, | Electronics, automotive, building and construction, furniture and textiles | |
| Industrial solutions | Elemental Bromine | Chemical reagent | Tire manufacturing, pharmaceuticals and agro |
Fire resistant fluids in turbines & power generation hydraulic systems and | Power plants and agro | ||
| Organic Bromine Compounds | Insecticides, solvents for chemical synthesis and chemical intermediates | Pharmaceuticals and agro | |
| Clear Brines | Oil and gas drillings | Oil and gas | |
| Merquel | Mercury emission control | Emission control in coal‑fired power plants | |
| Bromine‑Based Biocides | Water treatment and disinfection | ||
| Specialty minerals | Magnesia Products | Pharma and | |
Calcium Carbonate | Supplementals and pharma | Supplementals and pharma | |
| Solid | Deicing, food, oil drilling, pharma | Deicing, sodium replacement, KCl for drugs. multivitamins, oil drilling companies, small industrial niche markets |
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Industrial Products also develops innovative products and new applications for existing products. The newNew products introduced in recent years include, among others, FR122P flame retardant (a polymeric bromine‑based flame retardant used in insulation material in the construction industry), TexFRon® 4002 (a polymeric flame retardant product for textiles),bromine compounds for energy storage (a wide range of products useused in bromine-based flow batteries), VeriQuel™VeriQuel®R100 (a phosphorus-based reactive flame retardant for rigid polyisocyanurate and polyurethane spray foam), our innovative Bromoquel (replacing ammonia and PolyQuel®other chemicals as more flexible and effective treatment in case of bromine leakage), VeriQuel® F series (phosphorus-based active flame retardants for flexible polyurethane), CareMag® D (a new natural raw material for deodorants), PolyQuel® P100 (polymeric phosphorousphosphorus‑based flame retardant for high end epoxy printed circuit boards). and Phosphorus Acid of 80% concentration, which enables customers to improve productivity and yield.
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The Industrial Products segment's principal manufacturing plants and marketing companies are set forth in the map below:
In 2018,2021, ICL produced approximately 175182 thousand tonnestons of elemental bromine out of potential annual maximum production capacity of approximately 280 thousand tonnes.tons. Approximately 75%74% of the elemental bromine produced is used internally for the production of bromine compounds.
During 2021, the industry's best practicesIndustrial Products segment ceased operations at two of its production sites in China. In July 2021, we completed the sale of Jiaxing ICL Chemical Co. Ltd. (ICL Zhapu) and in October 2021, we shut down our LYG plant following a way that supports information flow and allows remote control overrequest by the entire site. The new approach is based on centralized operational management which brings opportunities for innovation, economic of scale, benefits of safety, emergency response and management.Chinese authorities to either relocate the plant or shut it down. Authorities asked to conduct additional land survey. Once it complete, the compensation will be finalized.
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Competition
ICL Industrial Products is the world's largest manufacturer of elemental bromine. Based on internal estimates, in 2021 ICL and its two main competitors, Albemarle and Lanxess, accounted for the majority of the worldwide production of bromine in 2018.bromine. Chinese and Indian production accounted for most of the remainder of the global production from various different sources, including, from brine produced from wells, seawater and desalinization plants. InChinese supply is decreasing mainly due to continued depletion of brine wells, along with stricter enforcement in recent years by the Chinese authorities have been gearing-up their enforcement of regulations regardingrelated to safety and ecology in the local brominechemical industry. During 2017-2018, the MEP (Ministry of Environmental Protection) performed inspections in the province of Shandong (main Bromine production area in China). As a result of the inspections, producers are required to execute large investments in order to meet the ecological requirements. Due to these regulations,trends, favorable conditions werehave developed in the Chinese bromine and bromine compounds market.
Lanxess and Albemarle produce bromine primarily from underground brine sources in the United States. Albemarle also has a joint venture with a Jordanian company for the production ofto produce bromine and bromine compounds which is located on the Jordanian side of the Dead Sea, sharing the same source of raw materials with ICL. Lanxess purchases bromine and some other bromine compounds from theour Industrial Products segment under a long‑term contract.
The main barrier to entry into the bromine and bromine compound market is access to an economically viable source of bromine havingin a sufficiently high concentration. In addition, the bromine business requires a complex logistics, system based onincluding special containers (isotanks)(Isotanks) for transporting the transportation of bromine. The need for thethese logistics system ispresents a barrier toof entry ofto competitors into the global bromine trade.
The Dead Sea operations offer the world’s highest bromine concentration, while our bromine compounds facility at Neot Hovav, Israel, is the largest worldwide. As a result, the segment's relatively low production cost of elemental bromine gives it a competitive advantage. An additional competitive advantage, deriving from ICL’s complex logistics system, which includes the largest Isotanks fleet in the biocides market for water treatment. The major barrier to entry intoworld. In addition, the market is related to the processsegment operates worldwide marketing, sales and supply chain network, a range of obtaining approval from the regulatory authorities to supply the biocide. During 2015, a new regulation (BPR Art. 95) entered into effect in Europe permitting only holders of the biocide approvals to sell. This acted to remove Chinese producers from supplying directly to the market. ICL is a registered and approved biocide producer.
Raw Materials and Suppliers
The principal raw materials used by theour Industrial Products segment for manufacturethe manufacturing of theits end products are bromine, chlorine, phosphorus and magnesia. The production process also uses significant amounts of water and energy. The Companysegment produces a significant portion of its raw materials through theoperations to extract Dead Sea minerals extraction operations.minerals. For further information on the extraction operations, see “Item 4 - Information on the Company— D. Property, Plant and Equipment— Mineral Extraction and Mining Operations”.
Bromine is produced from the end brines (salt solutions) that are a by‑product of the process of production of potash from carnallite.potash. The brine is pumped into ICL Industrial Products’ plant in Sodom, where bromine is produced in an oxidation process using chlorine.chlorine and steam.
Chlorine is produced by electrolysis of sodium chloride and as a by‑product of the metal magnesium production process of Dead Sea Magnesium Ltd. (“Dead Sea Magnesium”). The electrolysis facility and the magnesium plant are located next to the bromine production facility in Sodom. The sodium chloride used in the electrolysis process is also a by‑product of the potash production in Sodom.
Industrial Products’Products uses elemental bromine to manufacture bromine compounds at its facilities in Israel, the Netherlands and China. The restremainder of the bromine is sold to third parties. Most bromine compounds are manufactured by a chemical process involving bromine together with a range of other raw materials, of which the largest areis Bisphenol A, which is used to manufacture the bromine‑bromine-based flame retardant TBBA. Furthermore, the Industrial Products segment purchases many other raw materials that are required for production ofto produce its various products.products.
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Elemental phosphorus (P4) is produced in a roasting process from ores, originating mainly in Central Asia (Kazakhstan), the United States and China. The Industrial Products segment uses elemental phosphorus to produce phosphorus compounds at its factories (mainly phosphorous-basedphosphorous based flame retardants). The basic phosphorus compound, POCl3, is manufactured in a chemical process that combines phosphorus, chlorine and oxygen. The reaction of this compound with a variety of other raw materials (such as propylene oxide)Propylene Oxide) creates the commercial phosphorus compounds.
Industrial Products uses magnesium chloride brine to manufacture magnesia products at its Mishor Rotem facilities in Israel and MgCl2MgCl2 flakes and pellets at its facilities in Sodom Israel. In addition, Thethe Industrial Products segment uses KCl from theour Potash segment to manufacture pure and industrial grades of KCl.KCl in Sodom.
Industrial Products maintains raw‑material inventories in quantities that take into account the projected level of production based on consumption, supply dates, distance from the supplier and other operational and logisticallogistic considerations.
As part of our strategy to increase its energy consumption from renewable energy sources, the Company has signed several contracts for the installation of PV panels at its production sites, which will gradually occur from 2022 onward.
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Sales, Marketing and Distribution
Industrial Products’ principal markets are the United States, westernWestern Europe, China, Japan, and Taiwan. Industrial Products sells its products primarily through a network of marketing companies, while a smaller partportion of sales is conducted through agents and distributors throughout the world. Commissions are paid to agents as isin accordance with the sector's customary practice. Approximately half of our sales in the sector. MostIndustrial Products segment are conducted via long‑term agreements with an initial term of one year or more. Nevertheless, the sales are not executed under long‑term contracts or orders, but ratherIndustrial Products segment also sells its products via current orders, close to the date of supply. Nevertheless, the Industrial Products segment has several longer-term contracts (a year or more) and working to achieve additional long-term agreements.
Industrial Products’ policy is to maintain adequate inventory levels, which varies from product to product, in order to ensure orderly supply to customers in light of the customers’ distance from the production centers and their demand for inventory availability while optimizing the inventory storage costs. Therefore, portionsa portion of finished product inventories are held in storage facilities in the destination countries.
Industrial Products extends credit terms to its customers according to its credit policy. Sales are generally covered by trade credit risk insurance or by letters of credit from banks with high credit ratings.
Seasonality
Industrial Products’ operations are not characterized by seasonal fluctuations. However, sales of some of its products do fluctuate between the various seasons. Agricultural products are characterized by relatively high sales in the second and third quarters. Biocides for swimming pools are characterized by relatively lower sales in the fourth quarter. MgCl2 for de‑icing sales are characterized by relatively higher sales in the first and fourth quarters. The aggregate impact of these diverse seasonal differences on the Industrial Products segment is not significant.
Natural Resources Tax in Israel
The Law for Taxation of Profits from Natural Resources entered into effectin Israel became effective on January 1, 2016.2016, with respect to our Bromine operation. For additionalfurther information, see Note 1715 to our Audited Financial Statements.
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Potash Segment
In 2018,2021, the total sales of the Potash segment were $1,623totaled to $1,931 million constituting 29% of ICL's total sales (including sales to other segments), whilean increase of 43% compared to 2020. Total sales of the Potash segment constituted approximately 28% of ICL's total sales, an increase of 1% compared to 2020. The segment's operating income totaled $399 million, an increase of the segment totaled $393 million, constituting 39% of the233% compared to 2020. The segment's total operating income attributableconstituted approximately 33% of ICL’s adjusted operating income, an increase of 10% compared to the segments.2020. For additionalfurther information, see "Item 3 – Key Information – A. Selected Financial Data – Adjusted to reported operating and net income (non-GAAP financial measures)" and “Item 5 - Operating and Financial Review and Prospects— A. Operating Results— Results of Operations”.
Potash
Products
Potash is the common name for potassium chloride, which is the most common source of potassium for plants and one of the three essential nutrients for plant development, whichdevelopment. Potash assists in protection of plants from diseasesdisease and damaging agents, helps them to adapt to different weather conditions, regulates theplant water level in the plant,levels, strengthens the plant stems and strengthens the plant's ability to absorb nourishing substances. ICL sellsWe sell potash for direct application as a fertilizer and to compound fertilizer manufacturers.
Production
Potash is produced from the Dead Sea and from an underground minesmine in Spain. The potash production process in Israel is based on extracting carnallite. The carnallite, which is a compound of potassium chloride (KCl) and magnesium chloride mixed with table salt,sodium chloride (NaCl), precipitates in some of the largest solar evaporation ponds in the world, which contain brines drawn from the Dead Sea. The carnallite is transferred to the plants where a chemical and physical process breaks down the carnallite crystal into potash using two distinct parallel technologies, cold crystallization and hot leach. Potash production in Spain is carried outconducted in an underground minesmine extracting sylvinite, a mixture of potash (KCl) and salt (NaCl) with varying potash concentrations. The potash is separated from the salt by a flotation process in the production plants situated near the mines.
The principal production facilities of the Potash business include its plants in Israel and Spain.
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The manufacturing plants, distribution centers and marketing companies of the Potashpotash business are set forth in the map below:
In 2018, the2021, our Potash business produced approximately 4.94.5 million tonnestons of potash and reached an annual production record level of approximately 3.8 million tonnes in Israel which derived mainly from efficiency activity in planning, maintenance and operational excellence.
Israel
Following ICL Dead Sea's record potash production in order to improve its competitive position in the market and to develop new, specialized products based on the main raw materials of2020, the segment by utilizingsuccessfully maintained a similar production level and produced 3,900K tons, while breaking the existingannual production facilities and sales and logistics array. Under this framework, the following actions were taken:record of granular potash with production of 1,858K tons.
The consolidation of the facilities and the ramp project are expected to increase our production capacity to an expected annual running rate of approximately 1 million tons by the second half of 2022, while lowering cost per ton, and compactionto reach a level of potash, and constructed a plant forup to about 1.3 million tons per year in the future, following completion of additional necessary adjustments in surface production of vacuum salt. The Company estimates that implementation of these actions will reduce expenses and contribute to streamlining, which will reduce potash production costs and contribute to alignment of the production activities with the environmental standards.facilities.
Salt - In order to help implement these expansion plans in Spain, in 2015, AkzoNobel (AkzoNobel Industrial Chemicals) and ICL Iberia and AkzoNobel Industrial Chemicals B.V. (currently known as Nobian Industrial Chemicals B.V., or Nobian) signed ana partnership agreement for production and marketing of high qualityto market high-quality vacuum salt and pure potash. High purity vacuum salt is used in a variety of applications in various industries, such as the:the chemicals industry (for instance in electrochemical companies), the leather and textile industries, the food and feed industries, and for water treatment applications. Following disputes between the Company and Nobian, in October 2021, an agreement was signed to terminate the partnership, under which the Company will pay a net amount of approximately $17 million for Nobian's holding in Sal Vesta (51%), Nobian’s share in a joint venture (SOPAA) and for the net settlement of all additional disputes between the parties.
construction and operation period. The production of potash in Spainconstruction period is expected to extend over four years and the operation period is expected to be about 1 million tonnes per year and to reach a level of up to about 1.3 million tonnes per year after completion of the necessary adjustments. In order to support the expected operational expansion in Spain, the Company is in the process of setting up a new designated facility in the Barcelona port that will replace the current facility and is making preparations for transition to use thereof. The new facility is expected to be constructed and operative towards the end of 2019.25 years.
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Competition
The potash market is characterized by a relatively small number of manufacturers, some of whichwhom export jointly. See“See“Item 3 - Key Information— D. Risk Factors— 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 ability to compete in the potash market is dependent mainly on production costs and logistic capabilities. Moreover, there are high entry barriers for new players due to the significant investment and length of time required to establish potash operations. In addition, this industry requires appropriate concessions and proximity of production facilities to the mines.
| The relatively low average cost of potash production at the Dead Sea, |
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Raw Materials and Suppliers
The Potash segment produces potash in Israel and Spain. Potash does not require additional chemical conversion to be used as a plant‑nutrient fertilizer. Nevertheless, it can also serve as a raw material in the production of certain specialty fertilizers.
The other primary utilities used by ICL in orderus to support theour potash production are natural gas, electricity, industrial water and neutralization materials.
Sales, Marketing and Distribution
The primary markets of the Potash business are Brazil, China, India, Europe China, Brazil and India. TheUSA. Our Potash businesssegment sells its fertilizersfertilizer products primarily via a network of its ownICL sales offices, as well as salesand through agents throughoutaround the world.
Most of the potashour Potash sales are not made by means of contracts or long‑term orders but, rather, through current orders proximate to the supply date (except for annual agreements with customers in India and China, see below)China). Accordingly, theour Potash segment does not have a significant orders' backlog.
In the Indian and Chinese markets, it is customary to carry on concentratedconduct protracted negotiations regarding the potash contracts, – part of which withpartly through commercial entities related to the governments of those countries. In other markets, potash is usually imported by a larger number of customers. In these markets, we have trade relations with most of the major customers.
In AugustApril 2021, ICL signed a contract with Indian Potash Limited (IPL), India’s largest importer of potash, to supply an aggregate 600,000 metric tons of potash, with mutual options for an additional 50,000 metric tons, to be supplied through December 2021. The agreed selling price in the contract is $280 per ton CIFFO Indian ports, $50 per ton above the previous contract. The contract is part of a five-year supply agreement signed in December 2018 between ICL and IPL. In November 2021, ICL reached an agreement with IPL to increase the selling price of 150 thousand tons of potash to be delivered to India in 2021 to $445 per ton CIFFO Indian ports.
On February 22, 2022, as part of the five-year supply agreements signed in December 2018, ICL signed a potash supply contract with its Indian customers, inIPL for the total amountsupply of 775 thousand tonnes (including optional quantities), for delivery between September 2018 and June 2019.an aggregate 600,000 metric tons of potash through December 2022. The contractagreed selling price is $290$590 per tonne CFR (an increase of $50 per tonne compared with the 2017 contract price).ton CIFFO Indian ports.
In September 2018,February 2022, ICL signed aframework agreements for supply of potash supply contract with its Chinese customers infor the total amount of 905 thousand tonnes (not including additional optional quantities), for delivery up to June 2019. The contract price is $290 per tonne CFR (an increase of $60 per tonne compared with the 2017 contract price)next three years (2022-2024).
For further information about trends affecting the segment, see Item 5 – "Operating and Financial Review and Prospects, Trends Affecting Potash Segment " to our 20F report.
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The Potash business transports potash from Israel and Spain as follows:
From Israel to overseas customers by ships (mainly in number of activities dealing with the need for increasing food quality, as well as for increased efficiencybulk), which are leased in the agriculture sector, to respond tomarket and loaded using designated facilities at the world’s growing population, decreasing agricultural landport of Ashdod on the Mediterranean Sea and the urgent need for greater environmental stewardship:port of Eilat on the Red Sea.
From Spain to local customers by trucks and overseas by ships, using designated facilities for bulk loading at the new port of Barcelona (Spain). In Israel, short mine-to-port distances and shorter shipping routes to emerging markets gives our Potash for Life (India) - In 2018,business a significant and unique advantage over our main competitors. For information regarding the Company continuednew designated facility at the “Potash for Life” project in India, in light of its position in this marketBarcelona port, see“Item 4 – Information on the Company— D. Property, Plant and the relatively low use of potassium fertilization in this country. About 1,000 demonstration plots were conducted in farmers' fields in ten states and more than 42 districts. Other educative activities, like farmers' field days, potash campaigns and crop seminars were also conducted.
Seasonality
The seasonal nature of the demand for theour Potash business’sbusiness’ products gives rise generally to quarterlyis usually characterized by higher sales fluctuations, as sales levels in the second and third quarters are generally higher thanquarters. The prolonged impact of the COVID-19 pandemic has changed this seasonal sales inpattern, as governments around the first and fourth quarters. In recent years, due to various influences on the timing of sales, primarily price fluctuations and the effects of negotiationsworld, especially in China, have adopted “Food Security” policies, which have supported high levels of crops’ demand and Indiaprices. The strong, global demand for grains has resulted in a continuous decline in grains stock-to-use ratio which, in turn, supports higher fertilizer demand and changes in the timing of fertilizer imports to Brazil, the effects of seasonality explained above have been reduced as compared to earlier periods. In the years 2016 to 2018, the delay in signing of the contracts with the Chinese and Indian customers caused a situation wherein the total sales in the second half of the year were higher than in the first half of the year.price levels, including potash.
Natural Resources Tax
The Law for Taxation of Profits from Natural Resources in Israel entered into effect on January 1, 2016, except2017, with respect to our Potash operations at ICL Dead Sea (potash operation) regarding which the effective date was January 1, 2017. Sea.For additionalfurther information, see Note 1715 to our Audited Financial Statements.
Additional products
The Potash segment produces and sells additional products, including Polysulphate™Polysulphate®, PotashpluS®, magnesium-based products, dehydrated carnallite, chlorine, salt produced in underground mines in the UK and Spain, vacuum salt produced in Spain, electricity surplus produced in Israel and others.
FertilizerpluS
FertilizerpluS is ICL's premium fertilizers line, based mainly on polyhalite (marketed by the Company as Polysulphate™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 a wide range of crops and are intended to enhance crops, improvecrop value by improving yields and increaseincreasing fertilizer efficiency.uptake. We produce our FertilizerpluS products through both our Potash and the Phosphate Solutions segments. See below a list of products that are included in the FertilizerpluS line.
Polyhaliteis a mineral that is exclusively mined by ICL through theour Potash segment in a an underground mine (ICL Boulby), located in North Yorkshire in the UK, and is marketed under the brand name Polysulphate™Polysulphate®. 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 the production of fertilizers. Polysulphate™Polysulphate® is composed of sulphur (SO348%), potash (K2O 14%), calcium (CaO 17%) and magnesium (MgO 6%), which are essential components for the improvement of crops and agricultural products. Polysulphate™Polysulphate® is the basis for many of theour Company's FertilizerpluS products.
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The Company sees the Polysulphate™ asconsiders Polysulphate® a unique product for ICL, and is synergistic with the Company’sour other raw materials for purposesthe purpose of development ofdeveloping downstream products. In order toTo develop downstream products, we are expanding the Company is acting to expand the Polysulphate™Polysulphate® market by means of, among other things, development of a wide variety of innovative Polysulphate™Polysulphate®-based products.
In addition, in order2021, ICL's total sales of FertilizerpluS products amounted to develop the Polysulphate™ market for both existing and new uses,$168.2 million (including sales of the Potash segment has set up a teamand the Phosphate Solutions Segments), constituting 2.4% of agronomists that are performing dozens of tests on various crops in different countries. The favorable results of these tests are the basis for expansion of the sales to new customers and markets.our total sales.
Currently, we are the sole producer of Polysulphate® worldwide. Regarding an additional potential future producer of Polysulphate®, see “Item 3 – Key Information – D. Risk Factors – Our operations and sales are exposed to volatility in 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".
Following are several examples of Polysulphate™Polysulphate®-based products and additional products that are included in the FertilizerpluS line:
Polysulphate premium – granulated uniform, robust spheres of natural, multi-nutrient Polysulphate fertilizer with smooth surface protects from abrasion, humidity or damage & gives consistent flow rate
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 endenhancement of a wide range of crops through the second quartercombination of 2018,these three nutrients in one product.
PK+Micronutrients – a tailor-made fertilizer, with precise micronutrient composition for the Company ceased the productionspecific type of potash in crop.
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In 2018, the Company2021, we produced approximately 350789 thousand tonnestons of Polysulphate.Polysulphate®. The production of PolysulphatePolysulphate® in the UK is in the ramp-up stages and is expected to reach full production capacity towards the end of 2020.2023. The current annual potential production capacity of Polysulphate™Polysulphate® is above 1 million tonnes.tons. The potential production capacity is based on the hourly output of the plants, multiplied by potential hours of operation per year. This calculation assumes continuous production over the year, 24 hours a day, with the exception ofother than a few days for planned maintenance and renovations. Actual production is usually lower than the potential production capacity due to unexpected breakdowns, special maintenance operations, non‑availability of raw materials and market conditions.
Magnesium
The Potash segment includes magnesium activities,production, operated by Dead Sea Magnesium Ltd., which is the second largest magnesium producer inoutside China and the western world after the US magnesium producer “US Magnesium LLC”.USA. The magnesium business produces, marketsproducing, marketing and sellsselling pure magnesium and magnesium alloys, and also producesas well as dry carnallite and related by‑products, including chlorine and sylvinite.carnallite.
Magnesium is considered to beas the lightest structural metal. One of the main characteristics of magnesium is a higher strength-to‑strength-to weight ratio compared with other metals – mainly steel and aluminum. The main uses of magnesium are in the following industrial sectors: the aluminum sector, steel sector, and the casting sector of parts made of magnesium alloys (mainly for uses in the vehicleautomotive industry).
Production of the magnesium is based on the carnallite gathered from the Dead Sea and acquired from ICL Dead Sea. During the electrolysis process, the magnesium chloride present in the carnallite is separated into magnesium metal magnesium and chlorine gas.
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PhosphateSolutions Segment
The Phosphate Solutions segment (hereinafter – the Segment) is based on a phosphate value chain which uses phosphate commodity products, such as phosphate rock and fertilizer-grade phosphoric acid (“green phosphoric acid”), to produce specialty products with higher added value. The segment also produces and markets phosphate-based fertilizers.
In 2018,2021, the total sales of the Phosphate Solutions segment were $2,099totaled $2,432 million constituting 38% of ICL's total sales (including sales to other segments), whilean increase of 25% compared to 2020. Total sales of the operating income of Phosphate Solutions totaled $208 million, constituting 21%segment constituted approximately 35% of the operating income attributableICL's total sales, a decrease of 4% compared to the segments.
Products
The Phosphate Solutions segment produces a variety of products based on its backward integrated value chain.
Phosphate rock contains phosphorus, one of the three essential nutrients for plant development, which directly contributes to a wide range of physiological processes in a plant, including production of sugars (including starch), photosynthesis and energy transfer. Phosphorus strengthens plant stems, stimulates root development, promotes flower formation and accelerates crop development. Phosphate rock can be utilized for the production ofto produce phosphoric acid and can be sold as a raw material to other fertilizer producers. OurICL's phosphate rock is mined and processed from open pit mines and undergoes a beneficiation process, after which high‑grade multi‑purpose phosphate products are received.created.
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Green phosphoric acid (fertilizer-grade phosphoric acid) is produced by using beneficiated rock and sulphuric acid (produced by the segment by using sulphur acquired from third parties). Most of the green phosphoric acid is used to produce phosphate-based fertilizers and pure phosphoric acid, and in some cases, is sold to external costumers.
Phosphate fertilizers are produced by using green phosphoric acid or sulphuric acid, depending on the fertilizer type. The segment manufactures various types of fertilizers (TSP, SSP,(PK products, GSSP, GTSP and others) for different uses.
The segment manufactures purepurified phosphoric acid in Israel by purifying green phosphoric acid and also manufactures technical-grade purified phosphoric acid and green phosphoric acid in China, pure phosphoric acid in Brazil, and food grade and industrial phosphate salts in Israel, Germany, Brazil, the US and Mexico. Pure Purified phosphoric acid and green phosphoric acid are used to manufacture downstream products with high added value, such as, phosphate salts and acids for a wide range of food and industrial applications. In addition, the segment supplies pure phosphoric acid to ICL’s specialty fertilizers business.
Phosphate salts and acids are used in various industrial end markets, such as oral care, cleaning products, paints and coatings, water treatment, asphalt modification, construction, metal treatment and a variety of other industries.
more. The segment's products for the food industry include functional food ingredients and phosphate additives, which provide texture and stability solutions for the processed meat, meat alternatives, poultry, seafood, dairy, beverage and baked goods markets. goods.
In addition, the segment supplies purified phosphoric acid to our Innovative Ag Solutions segment (IAS) and also produces milk proteins and whey proteins for the food ingredients industry and offers spices and spice blends for the processed meat and poultry industries..
The segment owns, develops and commercializes proprietary technologies that supports the production of ICL's products forallergen-free plant-based structured protein systems, called ROVITARIS®, targeting the chemicalfast-growth plant-based meat alternative market. Recently, the segment entered into several strategic contracts with suppliers and production partners in order to further expand and diversify the food industries areROVITARIS® product portfolio to further meet consumer demand and strengthen ICL’s footprint in the meat alternative market. In December 2021, we opened a plant protein fiber production unit at our Carondelet, Missouri facility.
Moreover, our Phosphate Solutions segment, together with the Potash and IAS segments, produces and markets FertilizerpluS products. FertilizerpluS is our premium fertilizers line, based mainly on its intellectual propertypolyhalite (marketed by the Company as Polysulphate®) and have well-known brand names in their relevant markets.other products. For further information, see “Item 4 - Information on the Company— B. Business Overview— Potash Segment”.
Production
The Phosphate Solutions segment has a developed production setup fromthat includes phosphate rock mining, along with production and purchase of different grades of phosphoric acid, and up to production of commodities and specialties products inand commodities at different facilities around the world.
Phosphate rock is mined and processed from open pit mines three of which arethat located in the Negev Desert in Israel while the fourth is situatedand in Yunnan province in China. The Phosphate Solutions segmentproduces sulphuric acid, green phosphoric acid and phosphate fertilizers at its facilities in Israel and in China. The segment also operates facilities for the production ofto produce phosphate fertilizers in the Netherlands and Germany, as well as animal‑feed additives facilities in Turkey. The segment's specialty products are manufactured inat its facilities in Germany, the United States, Israel, Brazil, China, UK, Argentina Australia and Mexico.Australia. These facilities enable the segment to produce customer-specific solutions meetingthat meet the requirementrequirements of the different markets. Additionally, the segment produces milk and whey proteins for the food ingredients industry inat its facility in Austria.Austria.
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The Phosphate Solutions segment's principal manufacturing plants, distribution centers and marketing companies are set forth in the map below:
In 2018,2021, The Phosphate Solutions segment produced approximately: 5,006approximately 4,625 thousand tonnestons of enriched phosphate rock, 1,1951,204 thousand tonnestons of green phosphoric acid, 2,304 2,298thousand tonnestons of phosphate fertilizers, 289326 thousand tonnestons of purepurified phosphoric acid (as Phosphorus Pentoxide), 269288 thousand tonnestons of phosphate salts 71and 73 thousand tonnestons of food multi-blends.
Production-related developments throughout the segment:
Israel
Rotem Israel presented strong results in 2021 mainly due to improvement in the commodities market and higher prices and the contribution of a 2020 efficiency plan, which was implemented to address global market volatility and continuing economic and business uncertainty.
In the second halfaddition, in Rotem Israel, production records were achieved in certain product lines, such as, Fertilizers (1,082,100 tons) and Specialty Fertilizers, (71,700 tons), including 61,200 tons of 2018, green phosphoric acid production at ICL Rotem was unfavorably impacted by technical operation challenges. During the third quarterMKP and 10,500 tons of 2018, activities at ICL Rotem's Zin plant stopped for 2 months in order to adjust phosphate rock production volumes to the business environment. In November 2018, the Company signed an agreement with the worker's council which regulates the transition to a five-day workweek at ICL Rotem's Zin plant.Pekasead.
China
YPH, the joint venture in China,an equally owned company controlled by ICL, improves the competitiveness and flexibility of ICL’s phosphate activities, as a result of access to phosphate rock with extensive reserves. The joint manufacturing platform includes activities over the entire value chain. The performance of YPH JV significantly improved and shiftedcontinued to profitability during 2018, mainly due to reductionimprove in costs, increased production and sales and an increase in phosphate products prices.2021.
In December 2019, ICL launched its new food-grade phosphoric acid plant at YPH. The plant commenced its operation in 2021 and will add up to 70 thousand tons of food grade acid production capacity, once fully ramped-up. The plant produces qualified commercial food-grade acid quantities. The new plant is expected to strengthen our phosphate specialties operations and enable additional diversification into higher value-added products.
Americas
In 2020, the Company carried out further production optimizations following the continued reallocation of production from Mexico to San Jose dos Campos (Brazil) and Carondelet (US), which was initiated in 2019. Further, in December 2021, ICL opened its alternative-protein facility in St. Louis, US, which will produce a plant-based meat substitute for use by food companies, food-service distributors, restaurants and grocery chains.
Europe
Both of our fertilizer facilities in Europe, ICL Germany Ludwigshafen and ICL The Netherlands, successfully increased the utilization of Polysulphate® within a new range of PK products, which are part of the FertilizerpluS product line. For further information, see “Item 4 - Information on the Company— B. Business Overview— Potash Segment”.
In addition, during the third quarter of 2021, a fire event occurred at ICL Germany Ludwigshafen, ended without injuries. However, all production activities were stopped. Rehabilitation activities have begun, and the production is expected to be renewed by the end of first quarter of 2022.
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Competition
The competitive characteristics of the segment vary according to the type of products it manufactures and the markets in which they are sold.
The commodity phosphates market is extremely competitive, and the competitors include multi‑national companies and government‑owned companies. Many producers operate in this market and the main competitive factor is price. The ability to compete in the market is dependent, mainly, on raw material costs, production costs and logistics. For this reason,these reasons, companies located in proximity to sources of raw materials, ports, and customers, benefit from competitive advantages. A key factor in the area of raw materials (in addition to phosphate rock) is the accessibility to and the price of the sulphur and ammonia, which are required to manufacture the main phosphate fertilizers. Additional factors that affect competition to a certain extent include product quality, range of products, service, and the capability to develop new products that provide unique solutions.
Phosphate rock mines and phosphate fertilizers production facilities are located in many countries, including Morocco, which possesses the world’s largest phosphate rock reserves, China, Russia,Saudi Arabia, Algeria, Brazil, South Africa, Jordan, Egypt, Australia, the United States, Brazil, Saudi Arabia,Russia, Peru, Tunisia, Mexico, Lebanon, Syria, Togo, Senegal, Israel and others. A major part of the mined phosphate rock is used by their manufacturers, including ICL, mainly for production of downstream phosphate fertilizers (vertically integrated companies), including Triple Superphosphate (TSP).
The main phosphate fertilizers producers, who compete with ICL arein the global TSP market, include Office Chérifien des Phosphates (OCP Group, from Morocco), Ma’aden (Saudi Arabia)Mosaic (US), Mosaic (United States and Saudi Arabia via JV with Ma'aden), Jordan Phosphate Mines Co. (Jordan), Nutrien (Canada), GroupGroupe Chimique TunisienneTunisien (GCT, from Tunisia), the Roullier Group (Europe)Grupo Fertinal (Mexico), Agropolychim, (Bulgaria), Lebanon Chemical Company, Polyserve (Egypt) and other various Russian and Chinese producers.
Our Phosphate Solutions segment has a global leading position in the field of purepurified phosphoric acid market, based on its in-house technology and its downstream products, as well as in the field of food grade phosphatefood-grade phosphates and dairy proteins area.
markets. The segment's competitors are large and mid-sized international companies, serving the chemical and food industries, which carry onconduct manufacturing and marketing activities in various countries, as well as local companies servingthat serve local markets.
The primary competitors of the segment, in the chemical and food fields, are Chemische Fabrik Budenheim KG, Innophos Inc., Prayon S.A, Nutrien, Adithya Birla, Haifa Chemicals Ltd., FOSFA and various Chinese producers.
Significant competitors exist in the dairy protein field, including Bayrische Milchindustrie, Arla, Fonterra, Milei, LactoprotAlpavit and Sachsenmilch.AVH. Competitiveness is primarily determined by product quality, access to raw materials, supply chainschain capabilities and technologictechnical know‑how.
The Phosphate Solutions segment benefits from the following competitive advantages:
An integrated value chain that uses |
Logistical advantages due to the segment's geographical location and diversification, proximity to ports in Israel and Europe and relative proximity to its customers.
ICL Group Limited 75 Our Company is a global fertilizer producer that can combine potash and phosphate fertilizers in the same shipment, which enables us to service smaller customers, particularly in Brazil and the United States. |
YPH provides |
Raw Materials and Suppliers
The Phosphate Solutions segment produces most of the raw materials it uses for the production ofto produce its commodities and specialties products.
The segment produces phosphate rock as the primary raw material for its backward integrated value chain, commencing from mining of phosphate rock, in Israel and China, through production of green phosphoric acid and up to the production of phosphate-based fertilizers, purepurified phosphoric acid and specialty phosphate.phosphates.
The primary raw materials acquired from external sources are, mainly, sulphur, ammonia, different grades of purepurified phosphoric acid, soda ash, caustic soda and caustic soda.potassium hydroxide.
For the dairy protein business, especially in the organic and goat segments, securing organichigh quality raw materials (whole milk, skimmed milk and whey) is a key element of the operations. In orderA balance between short- and long-term agreements secures supply, while maintaining adaptability to secure the supply, there are long term agreements in place with all major suppliers, which are valid for the next 1–3 years.changing market conditions.
The Phosphate Solutions segment maintains inventories of sulphur, phosphate rock, green phosphoric acid, purified phosphoric acid and other raw materials in quantities that take into accountconsider the projected level of production based on consumption characteristics, supply times,timeline, distance from suppliers and other logistical considerations.
Sales, Marketing and Distribution
The Phosphate Solutions segment sells and markets its products worldwide. The primary markets of phosphate commodities products are Europe, China, Brazil, India, the United States and Turkey.Israel. Phosphate specialties products are primarily marketed to industrial, food and commercial customers in Europe, North America, Asia, South America and Asia.Australia. The marketing network is based, mainly, on an extensive internala marketing and sales organization and, to a lesser extent, on external distributors and sales agents.
The Phosphate Solutions segment extends credit terms to its customers, according to the customary practice in their locations. The segment's sales are generally covered by trade credit risk insurance or by letters of credit from banks with high credit ratings.
Most of the segment's sales do not take placeoccur according to long‑term orders or contracts but are regularly ordered close to the time of supply. Accordingly,Therefore, there is no significant orders' backlog.
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The Phosphate Solutions segment shipstransports its products from Israel to customers overseas by ships (mainly in bulk) that it leases in the global marine transportation market, which are loaded by using designated facilities in the ports of Ashdod on the Mediterranean Sea and Eilat on the Red Sea. The segment also has special port facilities for bulk loading in Amsterdam (the Netherlands) and Ludwigshafen (Germany). YPH JV sells most of its products in China and is preparing to provide a logistical solution tofor marine shipping outside China, when it will be required.
The prices of phosphate-based fertilizers are determined in negotiations between the manufacturers and the customers and are affected mainly by the relationship between the market demand and the available supply, at that date as well as the sizeidentity of the customer and the period of the agreement. Prices for relatively long‑term contracts are not necessarily similar to spotthe same as “spot” prices (current/casual sales transactions).
Most sales of the phosphate specialties products are made under agreements with terms of one or two years, or through “spot” orders placed close to the date of supply. In addition, forFor these products, framework agreements exist with specific customers exist, through which the customercustomers may purchase up to anthe maximum agreed maximum quantities of products during the term, on the basis of which the customer issues purchase orders from time to time.term.
For purposes of effective marketing and sellingsale of many of itsthe segment's products, effectively, especially food products, Technical Salestechnical sales and Applicationsapplications, personnel work closely with customers in order to tailor the products to the customers’their needs.
The strategy regardingsegment maintains adequate inventories of phosphate specialties products is to maintain adequate inventories to ensure orderly supply to customers, in light ofconsidering the customers’ distance from the manufacturing locations and their demand for inventory availability, in conjunction with optimization of inventory storage costs. Therefore, portions of thesome finished product inventories are heldstored in storage facilities in the destination countries.countries.
Seasonality
The seasonal nature of demand for phosphate commodities products is usually characterized by higher sales in the second and third quarters than sales in the first and fourth quarters. In recent years, due to various influences on the timing of sales, primarily price fluctuations, the effects of seasonality have been reduced as compared to earlierpast periods.
The target markets of phosphate specialties products are not characterized by significant seasonality. However, the fourth quarter of the year is relatively weak due to the holiday season and customers’ destocking towards the end of the year.
Natural Resources Tax
The Law for Taxation of Profits from Natural Resources whichin Israel entered into effect on January 1, 2016. 2016, which respect to Phosphate operations at Rotem Israel.For additionalfurther information, see Note 1715 to our Audited Financial Statements.
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Innovative Ag Solutions Segment
The Innovative Ag Solutions segment develops, manufactures, markets and sells fertilizers that are based primarily on nitrogen, potash (potassium chloride) and phosphate. It produces water soluble specialty fertilizers in Belgium, Israel and the US,Spain, liquid fertilizers in Israel, Spain and Brazil, straight soluble fertilizers in China and Israel, and Spain, and controlled‑controlled release fertilizers in the Netherlands, Brazil and the United States.States, as well as secondary nutrients, biostimulants, soil conditioners, seed treatment product, and adjuvants in Brazil. ICL's specialty fertilizers business markets its products worldwide, mainly in Europe, Asia, North America, Brazil and Israel.
In 2018,2021, the sales of the Innovative Ag Solutions segment totaled $741$1,245 million constituting approximately 13% of ICL's total sales (including sales to other segments), an increase of 7%70% compared to 2017 sales.2020. The segment operating profit totaled $57 million, constituting 6%sales of the Innovative Ag Solutions segment constituted approximately 18% of ICL's total sales, an increase of 3% compared to 2020. The segment's operating profit attributableincome totaled $121 million, an increase of 203% compared to the segments.2020. The Innovative Ag Solutions segment’s operating income constituted approximately 10% of ICL’s adjusted operating income, an increase of 2% million compared to 2020. For additionalfurther information, see "Item 3 – Key Information – A. Selected Financial Data – Adjusted to reported operating and net income (non-GAAP financial measures)" and “Item 5 - Operating and Financial Review and Prospects— A. Operating Results— Results of Operations”.
Specialty fertilizers offer improved value to the grower compared to the use of regularother fertilizers as they are more efficient, maximize yield and quality and require lower labor costs. The following pyramid presents the different fertilizer product lines – the high‑value products are usually accompanied by a higher price per tonne.ton. ICL's Innovative Ag Solutions segment (IAS) produces most of the high value products, except for potassium nitrate and calcium nitrate.
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Our Specialty Fertilizers business operates in 2 main markets:
Specialty Agriculture
This market includes high-value agricultural crops, such as fruits and vegetables. Enhanced efficiency fertilizers are used and applied mainly into these crops. The use of specialty fertilizers in row crops, such as sugar cane, corn and wheat can also be beneficial – subject to climate and soil conditions. TheOne of the main marketmarkets for ICL is related to the drip irrigation/fertigation market. This market, which is growing as the use of drip irrigation systems is growingincreases across the globe.globe, mainly in emerging markets, such as China and India. The use of enhanced efficiency fertilizers, such as controlled release fertilizers, is growing due to their environmental and economic advantages, although such growth is still dependent on the price levels of crops and raw-material prices (e.g., urea, potassium and phosphorous)phosphorus).In Brazil, the adoption rate for micronutrients, bio-stimulants and soil conditioner is growing in a wide range of crops due to demand to increase productivity, improve and balance plant nutrition and reduce abiotic stress.
Turf & Ornamental (T&O)
Ornamental Horticulture
The Ornamental Horticulture market consists of growers of outdoor ornamental plants (nurseries) and pot and bedding plants (greenhouses). The growers require high quality fertilization programs to grow plants at the quality level required by the garden centers, DIY (Do‑It‑Yourself) outlets and retail chains. The IAS segment has a large, specialized sales force advisingthat advises growers on the optimal nutrition of the plants. ICLIt also has a specialized distributor network in the Ornamental Horticulture market, and itsmarket. The segment’s main product lines for this market are specialty fertilizers such as CRFs (controlled release fertilizers) and WSFs (water soluble fertilizers) with well-known brand names such as Osmocote, Peters & Universol. In specific markets, such as North America and the UK, a range of unique plant protection products is also included in the proposals for growing healthy plants. In the UK, ICL iswe are a leading companygrowing media supplier providing a totalcomplete solution for the ornamental growers as it produces and markets unique, high-quality peat and growing media products under the brand name Levington Advance.
Turf & Landscape
The professional turf market includes the following user groups: golf coursescourse green keepers, sport field grounds men,groundsmen, landscapers, contractors & lawn service providers.
These groups demand high-quality inputs to secure strong, high-quality turf. The usersThey also require an integrated approach for keeping theto keep turf strong and maintaining its health, without creating an environment that is conducive to the development of disease. There is an environmental need to limit the inputs and, therefore,which requires an integrated approach of unique, high-quality products is needed.products. The most important inputs are (specialty) fertilizers (controlled release-controlled release and slow-release fertilizers),fertilizers, grass seeds and plant protection products. ICLSome of these products’ well-known brands are Sierrablen, Sierraform and ProTurf. Recently, the segment launched a new brand of organic Fertilizers named Gronamic. The segment offers all three product lines in an integrated program. ICLprogram, and has a dedicated and experienced team of unique professional grass experts, along with a distribution network serving its key markets, mainly in Europe and Asia.
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Products
Specialty fertilizers are highly effective fertilizers that allow more precise feeding of plants for their major nutrients needs (nitrogen, phosphorous and potassium) as well as secondary nutrients and micronutrients. These fertilizers allow efficient fertilizing through special applications among others, through drip irrigation systems and foliar spraying, and help growers obtain higher yields and quality. These fertilizers include, among others, controlled release fertilizers (CRF), slow-release fertilizers (SRF), soluble fertilizers and liquid fertilizers as follows:
Controlled‑release fertilizers (CRF) allow accurate release of nutrients over time. |
Osmocote is the most used controlled‑release fertilizer by ornamental growers worldwide. The brand is known to deliver high quality ornamental plants due to its consistent release of nutrients and unique patterned and programmed release technologies. We continue to invest in new technologies, as well as field trials to test and confirm the high reliability of our products. During the past few years, the Company developed several new technologies, such as “Dual Coating Technology” (which optimizes the release to ornamental plants) and “E-Max Release Technology” (a new coating technology with improved release characteristics, mainly for urea). Our latest innovation is Osmocote 5 with OTEA-system and NutriMatch technolgy. This 5th generation of CRF for ornamental growers delivers a unique, accurate and optimized release of nutrients and micronutrients. In addition, we also sell slow‑release fertilizers (SRF) which, due to their low solubility and hydrolysis, release nutrients slowly (generally up to a period of two months). Main markets for these fertilizers are in the Turf and Amenity markets.
Soluble fertilizers, which are fully water‑soluble, and fully‑soluble NPK compound fertilizers, are commonly used for fertilization through drip irrigation systems to optimize fertilizer efficiency in the root zone |
We also |
Liquid fertilizers are used for intensive agriculture and are integrated in irrigation systems (mainly drip systems). Our product line includes mostly tailor‑made formulations designed for specific soil & water/climate conditions and crop needs.
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Peat, a growing medium for various crops, where generally controlled‑release fertilizers and plant‑protection products are |
Water conservation and soil conditioning products are new product lines developed by the segment. Water conservation products are used in professional turf to keep water in the root-zone. Key brands are H2Flo and H2Pro. In 2021, the H2Gro brand grew strongly in the ornamental horticulture market. These products significantly reduce irrigation requirements. This new technology is also used in agriculture to allow better water availability around the root-zone of the crops.
Seed treatment technologies are used |
Bio-stimulants technologies such as Triplus, Improver, Concorde, Vegetação and Dimi Tônicoare, are being successfully used by farmers to increase their productivity and alleviate abiotic stress, such as drought, salinity and others.
| • | Adjuvants are essential to enhance foliar nutrition, herbicides and crop protection spray. We offer the South American market adjuvant technologies including Helper, Tensor Max and AD+ as well as various formulations that address the primary challenges facing farmers, such as drift and run off. |
| • | Soil conditioner has a set of amino and organic acids which contribute to the soil biological balance and help increase the index of beneficial microorganisms and, thus enlarge the capacity to revitalize the macro environment in a sustainable way. Recent research has indicated substantial potential for the product to maintain soil carbon stocks. The segment's brands, Mol Top and Longevus, contain a mix of carefully developed components that increase plant production potential. |
Production
ICL Innovative Ag Solutions’ principal production facilities include its plants in Israel (special compound fertilizers, liquid fertilizers and soluble NPK fertilizers), Spain (liquid fertilizers, and soluble NPK fertilizers), the United Kingdom (products for water conservation and peat incorporated in growing media), China (compound specialty fertilizers and soluble fertilizers), the Netherlands (controlled‑release fertilizers and fertilizer blends), Belgium (soluble NPK fertilizers) and, the United StatesUS (controlled‑release fertilizers) and Brazil (liquid fertilizers, water-soluble fertilizers, controlled-release fertilizers, improved efficiency phosphorus fertilizers, secondary nutrients fertilizers and micronutrients fertilizers).
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ICL Innovative Ag Solutions’ main manufacturing plants and marketing companies are set forthindicated in the map below:
ICL Innovative Ag Solutions’ annual potential production capacity is approximately 300360 thousand tonnestons of soluble fertilizers, 450480 thousand tonnestons of liquid fertilizers, 110200 thousand tonnestons of controlled‑controlled release fertilizers, and 400 thousand M3m3 of peat.growing media and 200 thousand tons of micronutrients. The potential production capacity of our various plants is based on the hourly output of the plants, multiplied by potential hours of operation per year. This calculation assumes continuous production over the year, 24 hours a day, with the exception ofother than a few days for planned maintenance and renovations. Actual production is usually lower than potential production capacity, due to unexpected breakdowns,unplanned downtime, special maintenance operations, lack of availability of raw materials, market conditions and seasonality in demand.
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Competition
The Specialty Fertilizers’global specialty fertilizer market size is estimated at approximately $13$15 billion per year, accounting for about 4% of the total fertilizers market.market. According to the Company's estimation, the specialty fertilizer market is growing at an average rate of about 6%5%-7% per year.
The Specialty Fertilizersspecialty fertilizers market is diversified, with a few global companies and many small to medium-size reginal and local producers. The market operates mainly on a local basis and most producers sell their products in nearby territories rather than globally. ICL’s specialty fertilizers business may beWe are considered one of the largest global players in the specialty fertilizers market, with production plants in Israel, Netherlands, Belgium, Spain, the UK, Brazil, the USA and China.
The Capex needed forrequired to develop new production capacities for existing specialty fertilizer companies is not considered highsignificant compared to the commodity fertilizers market. Nevertheless,fertilizer operations. However, barriers of entry for new players include, among others, extensive know-how in order for a new player to enter this market with different product groups, extensive knowledge is needed – both of chemical production and of agronomical know-how, as well asagronomy, large, professional selling and marketing teams, and customer support capabilities. ICL focuses and relies on a worldwide experienced R&D team, allowing it to stay significantly ahead of the competition in many of the specialty-fertilizers product lines, especially in the controlled-release, water soluble and liquid fertilizers markets. ICL provides high-level professional support to customers by means of experienced and professional marketing and agronomist teams with strong customer relationships that have been developed over decades of service, and through the offer of an extensive product portfolio.
In addition to ICL, other companies globally active in the specialty fertilizers market are:companies with a global presence include: SQM, Yara, Haifa Chemicals and Compo.Compo Expert. Other companies, such as Simplot, Nutrien and Koch (USA), Produquimica (Brazil)Kingenta and KingentaMoith (China) and JCAM (Japan), are considered regional players.
ICL specialty fertilizersInnovative Ag Solutions business benefits from the following competitive advantages:
Unique R&D and product development |
Added value production process technology – custom-made formulations that meet our customers’ unique needs.
Direct working relationships with farmers (B2C) especially in Brazil, providing service at the field level and |
Raw Materials and Suppliers
The primary raw materials acquired from external sources are mainly KNO3,KNO3, SOP, ammonia, NPK granules, Urea, KOH, coating materials, micronutrients and coating materials.
In 2021, there was a significant increase in raw material prices and unstable supply due to global supply chain challenges. We mitigated these challenges and have taken the appropriate measures to secure timely supply to customers.
The segment endeavors to hold inventories of the above raw materials in quantities that take into account theconsideration projected levellevels of production, based on consumption characteristics,levels, supply dates,timelines, distance from suppliers and other logistical considerations.considerations.
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Sales, Marketing and Distribution
The primary markets of the Specialty Fertilizers business line are the USA and Europe, particularly Spain, Israel, the US, India and Israel, Asia,China, the UK, Australia and Brazil. The Specialty Fertilizers business line sells its fertilizer products primarily via a network of its own sales offices as well as sales agents throughoutthrough distributers around the world.
In general, the business model relies on brand-name, premium specialty products which are marketed by a strong agronomist sales network at the end‑end user level, while sales are invoiced through distributor-partners whichthat distribute the products exclusively or semi-exclusively.products. The technical sales force emphasizes the agronomic advantages of the specialty products to the end users (farmers, growers of containerized plants, golf courses, etc.) and provides advice to and training of distributor sales representatives. ICL Innovative Ag. Solution also has specialized field forces for the Agriculture, Ornamental Horticulture and Turf & Landscape markets that are supported by specialized marketing teams.
Most of the specialty fertilizers business sales are not made by means of contracts or long‑termlong-term orders, but rather through current orders made close to the supply date. Accordingly, there is no significant orders’ backlog.backlog of orders.
Prices are determined via negotiations between ICLthe Company and its customers and are affected mainly by the relationship between market demand and the business line’s production cost,costs, as well as by the sizeidentity of the customer and terms of the agreement.
ICL Innovative Ag Solutions grants credit terms to its customers according to customary practices in their respective locations. ICL Innovative Ag Solutions credit sales are generally covered by trade credit risk insurance or by letters of credit from banks with high credit ratings.
Seasonality
The stronger sales season for Specialty Fertilizers is the first half of the year. The use and application of thespecialty fertilizers is related to the main growing seasons of the specialty crops around the globe.world. The main factors impacting seasonality are geographical location, type of crop, product and market. While the majority of our specialty fertilizer business serves markets in the northern hemisphere, where most of the demand for the segment's products are concentrated in the first half of the year, recent acquisitions of specialty fertilizer assets in Brazil, where demand is mostly concentrated in the second half of the year, somewhat balances the seasonality that characterized the segment's business.
As an example, some specialty products, such as soluble fertilizers in the Ornamental Horticulture market are sold and applied throughout the entire year with limited seasonality, whereas controlled release fertilizers are sold during the potting season of container nursery stock and pot‑pot plants (before spring time)springtime).
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Our business activities include, among other things, our innovation arm which promotes innovation, development of new products and services, as well as digital platforms and technological solutions for farmers and agronomists. This category includes Growers and Agmatix, innovative start-ups that are developing agricultural data processing and analysis capabilities for the future of agriculture.
For further information please see "Item 5 – Operating and Financial Review and Prospects – C. Research and Development, Patents and Licenses, etc. – Research and Development".
Community Involvement and Donations
We are involved and sustainability that seeks to integrate social, economic and environmental considerations into all of our business activities. This policy includes responsible management and continues improvementinvested in all sustainability fields: reducing environmental impacts; health and safety; product stewardship throughout the entire product life cycle; responsible use of natural and land resources; advanced mine reclamation; fair employment; business ethics; community contribution; transparency and additional fields. For additional details on our practices and performance in all sustainability fields, see “ICL Corporate Responsibility Report 2017” in our current report on Form 6-K (File no. 001-13742) furnished to the SEC on December 31, 2018. In addition, the Corporate Responsibility web-report (which constitutes the aforementioned report), is available on ICL's website. Neither this current report on Form 6-K nor our website is incorporated by reference into this Annual Report.
We focus our efforts on the communities in which our employees live and outside of Israel from which its employees come and within which it operates. ICL's main activities are inwhere we operate, mostly Negev communities in Israel's southern region, namely:Israel, such as Dimona, Yerucham, Beer Sheva, and the Bedouin settlements in the South. ICL focuses itsregion. The focus of our activities is mainly on supporting daily life sustenance areasin these communities (e.g., the society, economy, and environment), education and excellence of students in the science areasciences (with an emphasis on chemistry), strengthening of the local communitiesthem through performance of various social projects for the benefit of theaimed at benefiting local residents, and support of supporting underprivileged populations and those having special needs.needs populations.
"Thinking Doing": 2021 Activity Summary
“Thinking Doing” is ICL's flagship social program in Israel that operates in seven municipalities: Dimona, Yerucham, Beer Sheva, Ramat Negev Regional Council, Kuseife and Tamar Regional Council.
The program boosts community activity by developing entrepreneurship and local leadership among residents, local social organizations, and municipal staff. In addition, the program fosters social entrepreneurship and collaboration to create community resilience in southern Israel's communities by developing and establishing sustainable anchor institutions.
As a significant business organization in southern Israel, ICL is committed to contributing to community resilience and the quality of life of communities in the Negev region, and to playing an active role in leading change. "Thinking Doing" offers long-term guidance and support to community activists in organizational, social and economic areas. The program provides opportunities for local residents to take charge of their lives, engage in social innovation and develop a sense of responsibility for the region in which they live.
During 2021, due to the continued spread of COVID-19 and ongoing uncertainty regarding its implications for the future, we established circumstance-based community insights, while adapting activities and introducing flexibility vis-à-vis the residents' ability to meet and assemble. Dealing with COVID-19 created numerous insights regarding the meaning and importance of community, and in many municipalities it accelerated a perceptual change in the concept of community and enabled deeper involvement in ICL’s program – with the goal of promoting and establishing a stronger sense of community among residents and municipality staffs.
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"Thinking Doing" enjoys the support and personal involvement of all mayors and council chairpersons. Municipality staff are committed to activities and provide continuous guidance and support. The mayors and council chairpersons participate in developing the community vision, the unique municipal model, and the municipal steering committees, through participation in entrepreneur-community meetings, and they enjoy close familiarity and involvement in the program’s activities.
The Moshe Novomieski Potash Company Heritage Site Visitor Center in the Dead Sea, Israel
The Moshe Novomieski Potash Company Heritage and Visitor Center opened to the public in 2021. The Center is located at the old workers’ compound in Sodom and focuses on three main topics: the unique geological conditions that led to the formation of the Dead Sea; the history of the founding of the Eretz-Israeli Potash Company in pre-state Israel; and ICL’s current activities. The Center was established and is operated in collaboration with the Council for Preservation of Heritage Sites in Israel, the Jerusalem and Heritage Ministry, the Ministry of Education, and others, and it constitutes a significant milestone in the history of industry in the Land of Israel.
Our “Password for Every Student” program in Israel, is an initiative that provides basic and comprehensive solutions for the education system, from the user, through the classroom, school, and education system, creating a digital user community for the residents of the region. ICL’s support of this program provides 15,000 students in the Negev region with digital accessibility. In 2021, we began development of a unique program for ICL and “Password for Every Student’, which manifests the Company’s vision. The chairman of this project is Mr. Ehud Angel who serves as chairman for no consideration. Mr. Angel indirectly holds XT Holdings Inc., which is a stakeholder in Millennium Investment Elad Ltd., which is the controlling shareholder of Israel Corp., ICL’s parent company.
ICL’s charitable contributionsmonetary donations in 2018 totaled2021 amounted to approximately $5 million.$8 million (including the amount invested in the Visitor Center). In addition, during 2021, ICL contributed, at the Company's expense, about 12,755 hours of volunteer work of its employees. This amount does not include the numerous volunteer12,680 hours of the employees, partly at the employer’s expense.volunteer work after working hours, which was encouraged, organized, and logistically facilitated by ICL.
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Environmental, Health and Safety Matters
Introduction
ICL is committed to developing and implementing a comprehensive Environmental, Social and Governance (ESG) strategy for our business, including integrating responsible and sustainable considerations in the conduct of our business activities, including in the manufacture and sale of our products.
We continuously aim to create a balance between economic, social and environmental needs. Our vision includes reducing our greenhouse gas emissions; increasing our use of renewable energy; reducing our water consumption and promoting circular economy activities; supporting communities; and promoting personal environmental responsibility, as well as volunteering of our employees.
Our goals and targets call for increasing our energy efficiency and use of renewable energy, reducing our carbon footprint, water consumption and raw materials, and minimizing our air emissions and wastewater output. We aim to increase our re-use of materials and to recycle hazardous and non-hazardous wastes. We intend to continue to identify and promote circular economy opportunities and implement life-cycle analysis processes, as well as to integrate ecological considerations in our mining reclamation processes. We are committed to the global efforts to mitigate climate change and have pledged to reach a net-zero target by 2050. One of our main goals is to deliver sustainable products and industrial solutions that are safe when used responsibly and to provide our customers with product data and training on safe product handling. Another target is to achieve and maintain leading positions in ESG rankings and indices, as well as increase our transparency and open dialogue with ICL’s stakeholders.
Our Company also acts proactively to prevent environmental incidents through comprehensive risk management, knowledge sharing and effective maintenance, and by developing, implementing and maintaining appropriate management systems. We consider safety and health performance as core values and make every effort to achieve top tier safety results. We are working to increase the number of our suppliers who have conducted sustainability assessments via the Together for Sustainability (TfS) initiative and emphasize the personal environmental responsibility of our employees. We are committed to acting ethically and treating our stakeholders fairly. We are also proactive in our efforts to create a diverse and inclusive workforce (for more details, see “Promoting Diversity, Inclusion & Belonging (DIB)”). In addition, we aim to maintain transparent communications with regulatory authorities and to engage with the communities in which we reside. Our company contributes to initiatives in those communities and is committed to fostering social values with our various stakeholders.
ICL’s CEO and President, Mr. Raviv Zoller, was appointed as a member of the board of the International Fertilizer Association (IFA). Mr. Zoller is the new representative of the West Asia region and was elected as Chairman of IFA’s Sustainability Committee. With our support, members of the IFA organization will be joining the TfS initiative.
In addition, 2021 marked the first year in which we have voluntarily disclosed information according to the Climate-related Financial Disclosures (TCFD) framework. As this is the first year of implementation of our reporting in accordance with TCFD, we intend to continue to advance our relevant knowledge and develop this disclosure in future years. For more details, see “Climate Change and Greenhouse Gas Emissions - TCFD” below.
For further details regarding our ESG practices and performance, see “ICL Corporate Responsibility Report 2020” in our current Report on Form 6-K (File no. 001-13742) furnished to the SEC on August 2, 2021. In addition, our Corporate Responsibility web-report, is publicly available on our website at www.icl-group.com. Neither the 6-K report nor our website are incorporated by reference into this Annual Report, and the reference to our website is intended to be an inactive textual reference. The information found on, or accessible through, our website is not intended to be a part of this Annual Report.
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Sustainability
Sustainable Solutions
We focus on developing sustainable solutions that increase the positive global impact of ICL’s business through its existing and new products. The sustainable solutions that we offer are interlinked with the challenges that humanity is facing, such as providing food security. Our Research Development and Innovation department (RD&I) uses the UN Sustainable Development Goals (SDGs) as guiding principles in its RD&I activities.
As an essential player in the global food supply chain, our main goal is to contribute globally to the effort to achieve Zero Hunger (SDG 2). As the global population continues to rise, farmers worldwide are confronted by the constant need to increase yields, while facing land erosion, effects of climate change and other environmental challenges. They must also adapt to evolving regulations. The fertilizer industry helps to overcome agricultural challenges by facilitating increased crop yields on existing agricultural land and preventing excess conversion of natural habitats into agricultural land. To improve food security, our Company offers a broad variety of solutions to farmers, including supporting them with fertilizers and AgTech solutions. Our products enable growers to enhance their yields and improve their crop quality, while increasing their nutrient use efficiency (so that more fertilizer is taken up by crops), and reducing farmers’ water consumption. Water conservation products are used in professional turf to keep water in the root-zone. Key brands are H2Flo and H2Pro. These products significantly reduce irrigation requirements. This new technology is also used in agriculture to allow better water availability around the root-zone of the crops. Our IAS segment also helps farmers protect the environment by minimizing their losses of nutrients through leaching and volatilization, and by enabling them to reach data-based decisions through precision agriculture. We also offer farmers a Plant Nutrition Carbon Footprint Optimizer that allows them to compare nutrition plans and consider the tradeoffs between yields and environmental impact. The system calculates their Carbon Footprint & GHG emissions based on different parameters, such as field characteristics (soil type, organic matter, pH); environmental conditions; agronomic practices; crop type; fertilizer type; applications timing, and residue management. In addition, we market alternative proteins (plant-based substitutes) and various products, such as the JOHA® emulsifying salts, that enable longer shelf life for food products and reduce food waste.
Due to the growing impact of climate change on the agricultural supply chain, we are increasing our efforts to reduce our GHG emissions (Climate Action SDG 13). In addition, we sell products that contribute to resource efficiency, such as water conservation. We also sell products and services that support energy storage, a necessary step in advancing the use of renewable energy in the global economy. Strong demand for Electric Vehicles (EV) and energy storage is a potentially significant source of growth for our phosphate-based and bromine-based specialty products.
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Our efforts to improve ICL’s impact on the environment are being facilitated by innovation and commercial excellence activities (SDG 9). We are increasingly more operationally efficient, integrating renewable energy into our fuel mix and implementing ‘circular economy’ activities, both within our organization and in collaboration with our partners.
Circular Economy
‘Circular Economy’ and an ‘Integrated Production Value Chain’ are guiding principles that drive our activities. According to the Circular Economy approach, the industrial production process should shift from a linear process, in which resources and capital pass through the production chain and eventually become waste, to a closed process where by-products and waste can serve as inputs in new production processes.
We are also deploying innovation to create new products from what was previously regarded as by-products or waste, as well as working to optimize our production processes. Examples of new products include:
MagiK, a fertilization product developed from a by-product stream created as part of our magnesium's production process.
Fibagro Advance, a peat alternative growing media that uses waste, from the timber industry, and a thermo-mechanical process, to create a unique matrix that improves moisture and nutrient retention. It also has a lower carbon footprint, compared with peat and other peat alternatives.
| • | Our Phosphate Solution segment is integrating new technologies to use secondary source phosphate as an alternative to virgin raw materials. There are immediate uses in our production facilities in Europe and we are developing future sources for our fertilizer products, including a technology roadmap for recycling and recovery of phosphorus and nitrogen from secondary sources. |
In ICL Dead Sea, some salt was used in the rehabilitation of an abandoned site and the construction of an observatory for use by the public.
PSLoop - ICL is one of the co-founders of the PolyStyrene Loop (PSL) recycling project, together with the complete PS value chain, which introduces a miningrecycling scheme for PolyStyrene (PS) foams containing the flame retardant HBCD (Hexabromocyclododecane). The PolyStyrene Loop facility in the Netherlands will recycle EPS insulation and chemical company.will turn EPS foam demolition waste into new high-quality raw material. Impurities, such as cement or other construction residues, as well as the legacy flame retardant HBCD, will be safely removed, the valuable bromine it contains recovered and re -used in the new polymeric flame-retardant FR-112P.
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Phosphogypsum for building roads - As part of YPH circular economy efforts, the Company develops a variety of different uses for Phosphogypsum - our only by-product that has not yet been fully utilized. In addition to the existing solutions, that were already developed and implemented, the company has developed a new solution for integrating phosphogypsum into road paving. A full-scale pilot is expected to be carried out in China in 2022.
Our Ambition Creates Excellence (ACE) program has expanded to include development of a standardized approach for Circular Economy that will systematically review ICL’s waste streams, by-products, and other outputs from our operations, to identify opportunities to develop new and useful products and to optimize our operations.
ICL’s sustainability performance: Non-financial KPI’s & Sustainability Linked Loan
In September 2021, our Company entered into a €250 million sustainability-linked loan ("SLL") agreement. The loan is an innovative step forward in our ongoing sustainability efforts and includes three sustainability performance targets. These targets were designed to align with our sustainability strategy and goals, and each will be assessed at specific times during the term of the loan by third-party certification.
As part of this effort, we are targeting reductions in Scope 1 and Scope 2 CO₂e emissions resulting from our global operations. We are also planning to expand our participation in Together for Sustainability (TfS), a global initiative dedicated to developing and implementing a global supplier engagement program that assesses and improves sustainability sourcing practices. In addition, we continue to focus on inclusion, equality and expanded representation of women among our senior management.
For further information regarding the SLL, see “Item 5- Liquidity and Capital Resources- Debentures”.
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Health and Safety
As a leading global specialty minerals company, we are subject to various strict environmental, health and safety requirements under international, national and local laws, regulations and permits in each jurisdiction in which we operate. In order to sell our products and to operate our activities and processes, including mineral extraction, production, distribution, marketing and use of products, we must comply with relevant environmental, health and safety requirements. Those include, among others, requirements related to climate change, energy efficiency, air quality, liquid and solid waste discharge, land reclamation, hazardous substances, product requirements and others. Furthermore, we are required to hold certain environmental permits and licenses, such as air emission permits, waste discharge permits and others that aim to protect the health and safety of people and the environment. To continue our operations, we must comply with the requirements and conditions of these permits and licenses and to remedy any discrepancies in the event we deviate from such requirements and conditions.
Beyond existing environmental, health and safety requirements, which have tended to evolve over time and become more stringent, we may be subject to new environmental, health and safety requirements, which may be challenging and present uncertainties regarding our ability to comply with them. This may impact the capital and operating costs of our Company. Complying with such requirements may require the adjustment of the Company's facilities, production processes and operations. In addition, these potential new requirements may oblige us to obtain new permits and licenses for our continued operations. As a result, we strive to monitor the development of any environmental, health and safety requirements and evaluate them with respect to their potential impact on our operations.
As a leading specialty minerals company, we manufacture products that are part of everyday life. Some of itsour products, are defined as hazardous substances andif not managed properly, are potentially harmful to the environment and to the health and safety of the public if not managed properly. This applies also to effluents, air emissions and waste that are generated during production of some of the products. These substances can cause pollution that necessitates remediation, clean up or other responsive actions. In addition, some of ICL’s products may be hazardous to those who are exposed to them during their production, transportation, storage or use. The Company operates in accordance with environmental, health and safety regulation.
To prevent potential occupational hazards that may occur during our operations, and to ensure a safe and healthy work environment, we seek to comply with strict occupational safety and health standards prescribed by local, national and international laws and standards. The health of our employees is checked regularly, and all mandatory and locally agreed safety equipment is provided to our employees. We regularly monitor environmental and hygiene issues in occupational work areas, as required by regulations and company procedures. In addition, we invest extensive resources in training and mentoring, as well as in other safety measures, in order to improve occupational safety and health and prevent accidents and illnesses.
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We have implemented a new operations management system that provides the framework and structure to drive operational excellence, safety and reliability across our organization (OEMS-EHS - Operational Excellence Management System - Environmental Health & Safety). We have also adopted the Human and Organizational Performance (HOP) methodology, which focuses on early detection and prevention. The methodology aims to develop organizational transparency, as well as educate and create defense mechanisms for employee safety. Moreover, the HOP approach creates dialogue and knowledge sharing in our organization between managers and employees.
We are a learning organization and aim to implement a mindset of learning from failure and success across the organization. Analysis of accidents and “near misses” is encouraged and conducted at all ICL sites. Management meetings often include a case analysis of a recent safety incident, including conclusions and corrective actions taken. We also initiate cross-organizational learning processes on a regular basis to encourage peer learning.
In recent years, we have implemented advanced technologies to manage safety events and proactive safety processes globally. We deployed specialty software at all our sites and created a mobile safety application that is used globally for safety events management, hazard recognition and various proactive on-line activities. These processes include lesson-learning, shared learning, intake of innovative ideas arising from the field and an addition of controls and defenses. Both employees and managers undergo routine safety training. We have also implemented internal mechanisms to map, track and manage environmental incidents. Our ‘emergency event management’ methodology, supported by a mobile application with a unique module that was developed specifically for ICL, is practiced regularly within the Company, as well as by specified teams of first responders and other regulatory officials. This enables us to respond quickly to emergency events, as well as to conduct crisis management. We continue to enhance our procedures and measures with the goal of becoming best in class in safety and environmental performance.
Our risk management process is a structured, continuous process, consisting of both periodic and ongoing activities. We have established formal and uniform Enterprise Risk Management (ERM) policies and procedures and conducted a comprehensive risk mapping process throughout our organizational units. We are incorporating a Process Safety Management (PSM) methodology. Our Risk Management focuses on process safety at all sites throughout our Company. To accomplish this, we continue to develop and implement policies and standards guided by the CCPS framework, which include the EU Seveso Directive, OSHA PSM Regulation and UK HSE Control of Major Accidents. Recently, Israel’s Ministry of Environmental Protection adopted the Seveso risk assessment methodology and is expected to require it at our relevant facilities in Israel.
We continuously invest in capital projects towards environmental protection, health and safety and in their proactive management. In 2021, we invested approximately $122 million on environmental related projects, out of which $52 million were in our property, plant and equipment, and $70 in on‑going environmental protection. Over the next few years, we intend to invest significant capital to further reduce our air emissions, treat hazardous materials and reduce our overall negative environmental impact. These include investments required to comply with the Israeli Clean Air Law, European environmental regulation, and other regional environmental regulation. We estimate that in 2022 we will spend approximately $197 million on environment related purposes. 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 Israel” and "D. Risk Factors— As a leading global specialty minerals company the nature of our activities means that we are inherently exposed to hazards relating to materials, processes, production and mining" “, and "D. Risk Factors— Accidents occurring during our industrial and mining operations and failure to ensure the safety of workers and processes, could adversely affect our business”.
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For further details on regulatory, environmental, health and safety matters, see our “ICL Corporate Responsibility Report 2021” (web-report) on our website at 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.
Climate Change and Greenhouse Gas Emissions
The impact of climate change is being recognized throughout our value chain, from farmers exposed to extreme weather events, to higher energy prices in our own plants. We are accelerating our response and actions, due to the accelerating pace of climate change. Climate change is an increasing concern not only to governments and non-governmental organizations, but also to our stakeholders, including our investors, customers, employees and the general public.
We are witnessing an increasing level of new and tightened global regulation of greenhouse gases (“GHGs”). Ultimately, these regulations could impact our operations by requiring us to change our production processes or by increasing our raw-material, energy, production and transportation costs. This will also entail disclosure efforts and costs. For additional information regarding our climate change-related risk management and GHG emissions, see “Item 3 - Key Information— D. Risk Factors— 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”.
As part of our vision, we have established a decarbonization roadmap to achieve a goal of net zero GHG emissions by 2050. Our medium-term target is to reduce 30% of our Scope 1 and 2 GHG emissions by 2030, (vs. our 2018 baseline). We support the global effort initiated by the Paris Agreement to reduce GHG emissions at a pace that limits global warming to no more than 2℃.
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Task Force on Climate-related Financial Disclosures (TCFD)
Introduction
ICL is a leading global specialty minerals company. We acknowledge that the minerals and chemicals sector is a major energy user and emitter of greenhouse gasses with an imperative to transition to net zero. Moreover, the sector can be an important enabler of the low carbon transition through development of innovative products and services. We are committed to identifying, managing and harnessing the risks and opportunities that climate change and the low-carbon transition may bring. One of our expressions of this commitment is our support of the Task Force on Climate-related Financial Disclosures (TCFD).
This report contains our first TCFD disclosures, and it is formatted to align with the structure described in the October 2021 document ‘Task Force on Climate-related Financial Disclosures: Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures’ with the four overarching TCFD recommendations addressed in sections on Governance, Strategy, Risk Management, and Metrics and Targets. We recognize that this is the beginning of a new level of disclosure for our company, and we look forward to enhancing our understanding and management of climate-related risks, and reporting of such through our TCFD disclosures in the coming years.
Governance
ICL’s Board of Directors is responsible for setting ICL’s overall strategic direction, including climate-related matters. The Board acknowledges that climate change is a material governance and strategy issue. Therefore, it has appointed the Safety, Environment, Climate, Diversity, Inclusion and Public Affairs Committee to assists it with fulfilling responsibilities relating to the oversight of climate-related issues, such as climate‑change risk assessment and mitigation plans, installation of renewable energy facilities, site decarbonization plans, implementation of circular economy, achieving water saving targets and the like. For further information, see “Item 6 –Directors, Senior Management and Employs— C. Board Practices—Our Board Committees”.
The Executive Vice President of Operations (EVPO), who is also the Chief Risk Officer (CRO), is accountable for implementing ICL’s climate-related risk assessment policy, and reports to ICL’s Board of Directors on a quarterly basis (through the Safety, Environment, Climate, Diversity, Inclusion and Public Affairs Committee). The financial transition-related risk, which is also managed within the climate-change risk assessment is directed by ICL’s Chief Financial Officer (CFO), who reports to the Audit and Accounting Committee in full coordination with the EVPO.
ICL's Global Sustainability team is responsible for coordinating all ICL’s climate-change-related assessments and reports in accordance with global risk management (GRM).
ICL has also recently appointed two separate management-level committees supported by the global sustainability team and risk management team, for managing both physical and transition climate‑related matters. The purpose of these committees is to identify the potential climate-related risks and opportunities and assess their impact on ICL’s operational and logistics sites, as well as the financial transition climate-related matters, and to determine mitigating actions to minimize ICL’s exposure to these risks. Specific sites and segments at ICL are engaged, as needed. The committees report once every two months to the steering committee, headed by ICL’s Global EVPO and CFO, who then report to the Global Executive Management Committee and Board of Directors.
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Strategy
ICL’s Board of Directors and senior management are working to enhance the company climate strategy in order to align with the aims of the “Paris Agreement”, to keep global warming to well below 2℃.
We are taking a systematic approach to reduce our GHG emissions across our global operations. ESG KPIs and targets, including climate related targets, have been embedded in executive measures for success and financial performance-based benefits for key executives.
Informing Current Strategy and Initiatives
Climate risk and opportunities factors are incorporated into our business strategy and operations in order to improve our short, medium, and long-term financial resilience. In alignment with TCFD definitions, physical risks and opportunities are those that occur due to the physical manifestation of climate change – as chronic long term climate changes or as acute episodic weather events. Transition risks and opportunities are those related to the transition to a low carbon economy, including legal and/or regulatory risks such as carbon pricing, market supply and demand, reputation, and technology that support the transition to a low carbon economy.
ICL’s industrial operations continue to innovate, establishing best practices for industry, working to eliminate process inefficiencies and optimizing operations to mitigate greenhouse gas emissions. We have established a dedicated team to implement energy efficiency projects across our plants, throughout the world, as part of our Ambition Creates Excellence (ACE) program. In recognition of the change in emphasis from improving energy efficiency to reducing emissions of GHGs, in 2021 this team refocused its efforts on delivering lower carbon solutions globally, and is working to implement GHG reduction measures, as part of our decarbonization road map. Measures include transitioning to lower carbon fuels for both on-site power generation and process heating; increasing energy efficiency by phasing out inefficient production technologies; streamlining production facilities, and improved efficiency of heat and steam consumption. The team is responsible for increasing the renewable energy component in ICL’s fuel mix.
In parallel, our Global Procurement Organization (GPO) takes part in the effort to purchase and install renewable electricity. This is particularly successful in Europe, where above 70% of the electricity consumed in 2021 was purchased with Renewable Energy Guarantees of Origin. It is also engaging in extensive training to raise awareness among ICL’s suppliers regarding sustainability, transparency and carbon emissions reduction, as part of the TfS initiative.
We are using ICL’s innovation building infrastructure to promote our GHG reductions capacity. ICL’s Research, Development and Innovation (RD&I) organization is establishing both short-term and long-term goals for GHG emissions reduction technologies. Research, redesign and implementation of low carbon solutions are currently being introduced in effort to mitigate process-based and product-based emissions and to meet future needs. In the short term, our RD&I organization will use its existing infrastructure to challenge both internal and external partners to introduce solutions. For longer-term solutions, we will also tap into both ICL’s own RD&I as well as the market at large, through our Open Innovation platforms.
Recent examples include the development of products, such as advanced fertilizers that increase nutrient use efficiency and reduce water consumption, and the production of plant-based proteins as alternatives to meat-based options.
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Our global finance teams are integrating non-financial KPIs, such as GHG emissions and other ESG KPIs into our financial reporting. This includes creating the necessary data infrastructure (data quality and data management) and the management infrastructure to enable and support proper decision-making processes. This also includes an increase in the transparency of our ESG performance with rigor financial methodologies and metrics. Benefiting from the proper infrastructure, we have been able to take advantage of financial opportunities, such as the Sustainability Linked Loan (SLL) that we secured during 2021.
We support the objective of the TCFD initiative in identifying and responding to the financial implications for our business of both climate-related risks and opportunities. Our newly formed climate-related physical risk and transition teams comprise senior members of the finance and risks teams and will be tasked with making our actions transparent through disclosures that meet the needs of the financial sector and other stakeholders. Building on our existing sustainability programs, we will take action to identify and manage both the potential costs and benefits of climate-related issues to our business; ensuring integration into our risk management and strategic planning processes, resulting in a more resilient strategy.
Risk and Opportunities
Identified Climate Change Risks and Opportunities
Over the past several years, climate change and GHG emissions have been of increasing concern worldwide. Current and potential future laws and regulations governing climate change and GHG emissions present transition risks in the short term and beyond. Carbon taxes and cap-and-trade-emissions schemes are increasingly viewed in global jurisdictions as a way of pricing carbon – a key policy driver for GHG emissions reductions. These policies and regulatory levers may result in additional, potentially financially material, costs to the Company.
Currently, one of ICL Europe's sites, ICL Iberia, is covered by the EU-ETS Emissions Trading System, and, in the UK, ICL Boulby (from January 1, 2021) is subject to the UK Emissions Trading Scheme. There is considerable uncertainty over the future cost of allowances and how allowances might be allocated. Revisions to the EU ETS published in 2021 also include proposals for the introduction of a Carbon Border Adjustment Mechanism (CBAM), designed to prevent carbon leakage from the EU, while in Israel, a new carbon tax is planned to be implemented in the near future. Consequently, it may be expected that, in the short-term, ICL may need to purchase carbon allowances through the specific programs and/or incur additional capital costs for energy and emissions reduction measures. Similarly, carbon taxes could increase the costs of supplied materials and suppliers in the ICL value chain.
In addition, physical impacts including water shortages or changes in water quality, changing sea and temperature levels, increases in storm intensities, as well as changes in the availability of natural resources, could result in damage to facilities or equipment. Physical risks have the potential to financially disrupt operations, upstream raw material supply and downstream distribution. Climate change is expected to increase the frequency and likelihood of extreme weather events, such as floods. For example, ICL’s Dead Sea facilities, are located in an area that has been impacted by floods in the past. Physical risk can also occur when transport barges cannot operate on key transport routes, such as occurred when the water level of the Rhine River dropped. These physical effects may be attributed to climate change.
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For further information, see “Item 3 - Key Information— D. Risk Factors—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”.
Transition-related opportunities for our specialty businesses are illustrative of current and future opportunities created by ICL’s strategy relating to climate change. As part of our strategy to focus on our speciality products, and with typical R&D timelines ranging from 5-15 years, we successfully responded to some of the transitional risks through our product portfolio. One example is our new meat protein substitutes, which were driven by consumer demand (market transition) to reduce the ecological (carbon and water) footprint by consuming less meat. Our substitutes are versatile and can replace animal protein. Another example is ICL’s Fibagro Advance, our peat alternative growing media that uses waste from the timber industry and a thermo-mechanical process to create a unique matrix that improves moisture and nutrient retention with a lower carbon footprint compared to peat and other peat alternatives.
In addition, tracking consumer preferences toward low carbon footprint products (Market Demand Opportunities), we have developed a multi-nutrient fertilizer based on naturally occurring Polysulphate®. Polysulphate® requires no chemical processing, creates no waste products and has less potential to add to global warming than other comparable products. With its low carbon footprint, Polysulphate® is a fertilizer that could help farmers reach their industry or national carbon targets.
We are also researching new upcycling opportunities (Legislation and Regulation - R&D into Product Circularity). For example, the EU’s Circular Economy Action Plan 2020 promotes initiatives around the circular economy and encourages the use and re-use of resources for as long as possible. Expanded Polystyrene (EPS) foam is used in packaging and in insulation of buildings. Insulation EPS contains brominated flame retardants (with high global warming potential) that, due to their restricted use as a Persistent Organic Pollutant in numerous jurisdictions, prohibits their recycling. The ‘Polystyrene Loop’ initiative is driven by 70 members of the polystyrene value chain (producers to converters). ICL is a leading member of the initiative and has developed a technically verifiable method to safely remove brominated flame retardant from high quality construction EPS to enable the EPS to be recycled. This initiative was supported by funding from the EU (Funding for LIFE) to encourage product circularity.
In recognition of the importance of research and development (R&D) for our sector (we have been granted 770 patents in various countries), we also describe our strategic research, development and innovation activity as it relates to climate change in the R&D section below.
Informing Future Strategy
The ICL TCFD program is designed to complement and augment ICL’s existing climate strategy and associated risk management. ICL has applied forward-looking scenario analysis to identify physical and transition climate-related risks and opportunities that could have a material financial impact on the business over short (0-3 years), medium (3-10 years) and long (10+ years) term time horizons.
During 2021, ICL, initiated a high-level climate change scenario analysis to better understand the potential timing and materiality of climate-related risks and opportunities across ICL’s key geographies and business segments. The assessment was completed using relevance weightings and climate data to show the trends by key indicators for specific climate scenarios, considering future timeframes
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The following timeframes and scenarios were used in the assessment:
| • | Physical risks: 2030 and 2050, using the Intergovernmental Panel on Climate Change (IPCC) Representative Concentration Pathway (RCP) 4.5 (low carbon scenario) and 8.5 (high carbon scenario); |
| • | Transition risks and opportunities: 2025, 2030, 2040 and 2050, using the two scenarios ‘Stated Policies Scenario (STEPS)’ and ‘Sustainable Development Scenario (SDS)’ developed by the International Energy Agency (IEA). Additional scenario data was obtained from equivalent scenarios to STEPS/SDS. The IEA scenarios use carbon prices as an input into their modelling For example, STEPS take into consideration existing or announced carbon pricing schemes and in SDS it is assumed that pricing is established in all advanced economies. |
The outputs from this process resulted in a set of potential financially material physical risks (Table 1 below) and transition risks and opportunities (Table 2 below).
Physical Risks:
Climate-related physical- risks may be expected to occur under all scenarios but may be more material under the high carbon scenario - IPPC RCP 8.5. Table 1 identifies the headline potentially material physical risks that may affect regions in which we operate, including extreme heat, storms and high winds in the long term (by 2050, under RCP 8.5).
Table 1: Physical risks by region under Baseline and Projected RCP 8.5
| Location | Short-term 0 to 3 years (2022 to 2025) | Medium-term 3 to 13 years (2025 to 2035) | Long-term 13+ years (2035 to 2050) |
| Israel | Extreme Heat, storm & wind | Extreme heat, storms and wind, water stress. | Extreme heat, storms and wind, water stress |
| China | Watercourse & rainfall flooding, storms & wind, water stress | Extreme heat, watercourse & rainfall flooding | Extreme heat, watercourse & rainfall flooding |
| Europe | Watercourse flooding, storm & wind | Extreme heat, watercourse & coastal & rainfall flooding, storms & wind, water stress | Extreme heat, watercourse & coastal flooding, storms & wind, water stress, wildfires |
| USA | Watercourse flooding, extreme heat, storms, & wind | Extreme heat, watercourse flooding, storms & wind, water stress | Extreme heat, WC flooding, storms & wind, water stress |
* The table above is based on an analysis of ICL’s main sites. The new acquisitions in Brazil that occurred during 2021 have yet to be analyzed as part of the 2021 process.
Mitigation measures currently adopted by ICL at various sites include, but are not limited to, flood management plans, specific insurance policies (e.g., for high winds), emergency response plans, and improved ventilation measures.
These potential physical risks will be further evaluated by ICL as it further develops its TCFD program in the coming years. However, it is noted that the physical risks in Table 1 do not yet consider those that may arise in the value chain, and which might affect future demand for products or on the availability of supplies.
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Transition Risks and Opportunities:
Transition risks will be experienced as economies transition towards a low carbon / net zero world. In 2021, an initial assessment was performed for the first time at ICL. Under the plausible scenario modelling completed to date, initial potential transition risks and opportunities in the short-medium- and long-term have been identified and are presented in Table 2.
Table 2: Examples of potentially material climate-related transition risks and opportunities for ICL, including planned or existing responses
| Risk / Opportunity description | Key ICL Segments | Risk / opportunity | Planned or existing responses |
| Regulation and Policy particularly in the medium term: Additional costs associated with increasingly stringent climate policy mechanisms, such as carbon pricing, emissions trading and carbon taxes including carbon border mechanism advancements. | All | Risk | Measures to reduce industrial CO2e intensity, such as internal carbon pricing, fuel switching, electrification, production process optimization and energy efficiency |
Regulatory and Policy, Market Demand and Reputational, particularly in the medium term: Increasing requirements to invest in renewable electricity generation, storage and purchasing, due to external policies and internal targets. Investment in site's operational improvements, such as energy efficiencies and optimization of production processes. | All, particularly Potash and Phosphate Solutions | Risk | Measures to transition away from unabated natural gas use, such as fuel switching, electrification, process optimization and energy efficiency |
| Market demand in the medium and long term - Decrease consumer demand for some of ICL’s products | All, mainly IP and Phosphate Solutions | Risk | •Reviewing potential risks. •RD&I is working to find alternatives and new opportunities |
Regulatory and Policy particularly in the medium term: Increased shipping transportation costs as a result of measures (investments/regulatory instruments) implemented to increase efficiency of the global shipping fleet | All | Risk | •Explore using low-carbon shipping methods and suppliers in the global supply chain |
Market Demand in the short to medium term: Increased consumer demand for ICL’s low-carbon products driving up revenue | All | Opportunity | •Investment into R&D for low-carbon fertilizers, as well as meat and dairy substitutes •Increase in target revenue for low-carbon products – aligning with the trend for product circularity and life cycle regulation •Creating procedures to collect, analyse and manage GHG data from all operations |
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| Risk / Opportunity description | Key ICL Segments | Risk / opportunity | Planned or existing responses |
Regulation and Policy driving Market Demand and Technology Innovation in the short to longer term: Increase in renewable energy generation leading to a reduction in emissions and operating costs | Dependent on geography, all particularly Potash and Phosphate Solutions | Opportunity | •Energy efficiency •Increase in renewable energy generation or procurement |
Regulation and Policy driving Market Demand in the short to medium term: Increased electrification of industrial processes leading to a reduction in emissions and operating costs | All, particularly Potash | Opportunity | •Electrifying fossil fuel-based industrial processes |
ICL acknowledges that the application of a scenario analysis to climate-related risk is a relatively new and rapidly evolving area. As part of our TCFD program, we will continue to enhance our analysis capabilities to reflect developments in modelling, policy, emissions pathways and wider stakeholder expectations. The outputs from further scenario analysis work, including carbon price trajectories, will be used to enhance ICL’s existing business planning processes and inform strategy. They will also be used as an engagement tool to improve understanding of climate related risks and opportunities within the Company. In this way, ICL will seek to integrate climate-related issues into its regular financial processes.
Risk Management
ICL has established formal and uniform enterprise risk management (ERM) policies and procedures that follow the COSO1 risk management methodology. These policies and procedures have improved management processes for identifying, assessing and mitigating ICL’s top-rated risks. ERM activities utilize an integrated business framework to embed risk management into the Company’s business culture. Identified Individual risks, for example, related to extreme weather at individual locations, are prioritised with associated mitigation plans, often involving significant capital spend, to ensure long-term future resilience. This integration is designed to increase the performance of the different ICL business units, to support corporate efforts, to minimize exposure to and potential concentration of risks, including those related to climate-change, and to enable strategic achievements. ICL’s continuing review of the climate-related elements within its ERM, including those related to TCFD, will guide ICL’s future responses to, and risk management of, climate change impacts. This will include support for the senior management committees charged with managing both physical and transition-related climate risk.
1 COSO Committee of Sponsoring Organizations of the Treadway Committee
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Metrics and Targets
Metrics
The GHG emissions reported below include all direct (“Scope 1”) and indirect energy-related (“Scope 2”) emissions of the primary known greenhouse gasses, including: CO2, CH4, N2O and HFCs/HCFCs and SF6. During previous years reported, there was no consumption or emissions of PFCs or NF3. Direct emissions include emissions from stationary and mobile fuel combustion, refrigerants, non-energy related process emissions and emissions from onsite wastewater treatment facilities. Indirect energy‑related emissions include the calculated emissions resulting from consumption of purchased electricity, steam, heating and cooling.
The table below presents ICL’s greenhouse gas emissions for the years 2021 and 2018 (the baseline year). ICL followed the GHG Protocol and ISO 14064 standard methodologies. An independent assurance process was performed by an external expert, which included verification and validation in accorded with ISO 14064-3 standard for greenhouse gas statements.
Scope 1 & 2 GHG emissions
| Year 2021 (1) | Year 2018 (2) | VS 2018 | ||
| Scope 1 | CO2e tons (thousands) | 2,158 | 2,220 | (2.8%) |
| Scope 2 | CO2e tons (thousands) | 380 | 720 | (47.2%) |
| Total scope 1+2 GHG emission | CO2e tons (thousands) | 2,538 | 2,940 | (13.67%) |
| (1) | Emissions from facilities acquired during 2021 are not included in the current greenhouse gas measurements. |
| (2) | 2018 is the baseline year for ICL’s decarbonization roadmap. |
ICL expects to further refine its Scope 3 emissions data collection procedures over time and to include data on Scope 3 emissions in future Disclosures.
ICL’s 2021 Scope 1 & 2 emissions are 13.67% lower than the 2018 emissions, on course to meet the 2030 target successfully.
A reduction in emissions was achieved over the period 2018 to 2021 through the commissioning of the Sodom CHP (Combined Heat and Power) plant, which now supplies almost all electricity consumed by ICL’s sites in Israel. The electricity generated is of much lower carbon intensity compared to the less efficient oil-fired power plant it replaced, and the majority of the heat generated in combination with power generation is used in the Sodom production facilities, displacing natural gas previously used solely for process heating.
Further reductions mostly resulted from a decrease in Scope 2 emissions due to ICL’s decision to purchase renewable electricity for the majority of ICL sites in Europe.
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R&D
ICL continues to invest in research and development activities to meet many of the challenges posed by climate change, and to date has lodged over 770 patents, some of which are a response to climate change. Examples of the R&D that ICL is currently engaged in include:
The development of “next generation fertilization” to promote nutrient use efficiency, biodegradable coatings, nutrient sensing, growth enhancers, nitrogen fixation and soil health.
Food technology developments in the areas of food texture improvement, stabilization, salt reduction, shelf-life extension and the development of alternative, plant-based proteins, including meat substitutes.
Studies and development in the areas of E-mobility and sustainability, focusing on energy storage solutions, hydrogen carriers for fuel cells, urban mining and lithium battery recycling.
The development of novel materials, including flame retardants, paints & coatings additives and biocides.
Circular economy initiatives, including developments of waste-to-product solutions, waste recycling and efficiency improvement.
ICL’s Industry 4.0 program, which develops IOT concepts in manufacturing, safety and environment, machine learning and artificial intelligence for manufacturing optimization and product development.
ICL’s Digital Agriculture program, which aims to leverage ICL’s digital platforms and data-driven solutions to create an agro-professional community, enabling sharing of information and knowledge between growers and agro-professionals, retailers, academia, and food producers to extract the most value from agriculture.
Targets
ICL has established a decarbonization roadmap to achieve net zero GHG emissions by 2050. The near-term milestone is to reduce Scope 1 and 2 GHG emissions by 30% by 2030, when compared to a 2018 baseline. ICL supports the global effort initiated by the Paris Agreement to reduce GHG emissions at a pace that limits global warming to no more than 2℃.
ICL has already implemented several measures included in its decarbonization roadmap, including:
Commissioning of a high efficiency gas-fired combined heat and power (CHP) plant at ICL’s Sodom facility to supply ICL’s facilities in Israel, replacing older, oil-fired power generation systems.
Beginning the transition to the procurement of renewably generated electricity, across all ICL sites, starting with the procurement of renewable electricity for ICL sites in Europe.
Other measures in the Decarbonization Roadmap for future implementation include:
Phasing out oil shale-firing for power generation at ICL Rotem (Israel), in favour of a more efficient gas-fired power generation plant with much lower GHG emissions.
Improved measurement of GHG emissions, including digital dashboards for more accurate and up-to-date reporting of emission at site and product levels.
Eliminating or reducing process GHG emissions.
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Converting ICL’s production plants in Israel to the use of natural gas in place of higher carbon intensity energy sources such as fuel oils.
Increasing energy efficiency through the phasing out of inefficient production technologies, streamlining its production facilities, increasing the efficiency of its consumption of heat and steam, recovering heat where possible.
Reducing the use of electricity for lighting and air conditioning through the implementation of more efficient technologies.
Targeting 50% of electricity to be sourced from renewable energy, mainly at sites in Europe and North America. Renewable electricity supplies and market mechanisms such as power purchase agreements are not yet available in other parts of the world, but ICL will seek to increase its share of renewable electricity as it becomes available.
Planning for installation of solar photovoltaic (solar PV) electricity generation systems in all available and appropriate areas within the operational boundaries of ICL sites in Israel, Spain, Germany and other countries.
Use of carbon pricing consideration in product development and investment decision-making, in order to raise internal awareness, promote better life-cycle costing decisions, and better prepare our business for future emissions trading schemes.
Energy
We are engaged in efforts improve our energy metrics by increasing our use of clean and renewable energy, utilizing more efficient electricity production units (natural gas-based cogeneration) and implementing a multi-year energy efficiency program.
Renewable Energy
Our Company has created a cross-organizational team which includes representatives of our Global Procurement Organization (GPO) and Operational Excellence unit. They are responsible for increasing the renewable energy component in ICL’s fuel mix.
We have already invested in transitioning to renewable energy (externally-supplied electricity) for the majority of the electricity consumed by our European sites. These market-based emission reductions have made a significant impact on our emissions generated in Europe. This approach will be rolled out in North America during 2022, although the market for power purchase agreements and other similar renewable electricity supply contract mechanisms is not yet as developed as in Europe. In other regions where we operate, there are currently no mechanisms to directly procure renewable energy.
In addition, we conducted several feasibility studies across Europe and Israel during 2021 to identify which of our site assets are suitable for Photo-Voltaic (PV) installations. Several statutory challenges are delaying the implementation of PV in Israel. Certain projects have overcome the hurdles and been approved, and construction is expected to commence in early 2022. During 2022, our North American operations will be similarly assessed, and our other main sites globally (predominantly in Brazil and China) will be assessed in 2023.
Long-term, we are looking at projects that are compatible with our net zero (by 2050) goal. As we expect these types of projects to include major infrastructure challenges, we are initiating them now. One of the major projects that we are currently launching is a PV plant combined with Green Hydrogen production at our Sodom site (green hydrogen is defined as hydrogen produced by splitting water into hydrogen and oxygen using renewable electricity).
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Natural Gas
In 2010, we made a strategic transition to increase our use of natural gas (NG) instead of heavy fossil fuels (fuel oil, kerosene, diesel and shale oil) to power our largest production plants in Israel. The transition is nearly complete, with more than 95% of ICL Israel’s main energy-consuming sites converted to NG. This transition has also significantly reduced our emission of air pollutants (such as NOx and PM) in the areas surrounding our sites.
The remaining step in this transition is to transition away from the combustion of shale oil at our Rotem Israel site. In 2021, we ceased extracting shale oil minerals and commenced the construction of a new NG-fired turbine installation. We expect this new facility to commence operations in 2022, significantly reducing our emissions of GHG (and other pollutants) at the Rotem Israel site.
For more information regarding natural gas agreements, see Note 18 to our Audited Financial Statements and "Item 3 – Key Information - D. Risk Factors - Our operations could be adversely affected by price increases or shortages with respect to water, energy and our principal raw materials".
The European Energy Efficiency Directive (EED)
In July 2021, the European Commission published a proposal to recast the EU Directive on Energy Efficiency, aimed at further stimulating efforts to promote energy efficiency and achieve energy savings in the fight against climate change. This initiative forms part of the EU’s package of measures aimed at reducing net greenhouse gas emissions by at least 55% by 2030, with an ultimate objective of becoming climate neutral by 2050. Currently, the EED requires an 0.8% per year energy efficiency improvement through the end of 2023, but the proposal seeks to almost double this figure to 1.5% as of 2024 until 2030. The proposal requires each Member State (MS) to determine their own national contribution (based on a formula of objective criteria and benchmarks), which reflects national circumstances. We fully expect that each MS will develop its own response to these proposed changes to the EED, and the Company will develop plans and strategies to comply with these requirements for all our European operations going forward.
Air Quality
Reducing air emissions is a central goal of our environmental strategy. We are taking steps to reduce air emissions by implementing emission prevention solutions and switching to cleaner fuels. Our sites regularly monitor their emissions of pollutants to better manage our operations.
Israel
In Israel, air emissions from major industrial operations are regulated by the Clean Air Law (hereinafter - the Law) which aims to improve air quality, prevent, and reduce air pollution by implementing both prohibitions and obligations, and protect the health and quality of life of human beings and the environment. The Law addresses emission sources (including all our production plants in Israel) and is intended to serve as a platform for implementing the regulatory principles currently in place in the European Union (EU), specifically the principles of the IED (The Industrial Emissions Directive) that was adopted by the EU.
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Our plants in Israel that fall under the definition of Emission Source Subject to Licensing Requirements, have received air emission permits. In the event of deviations from the emission permits’ conditions, we could be subject to administrative enforcement measures, as well as to criminal liability. In addition, certain restrictions on our operations and significant capital investments may be imposed on our Company. In order to comply with the emissions permits granted under the Law, we have made significant investments, and will continue to do so as necessary. As a result, some of ICL’s air emissions have decreased considerably.
| • | DSW and DSM will implement major dust reduction projects over the next few years. Our other production sites in Israel will also increase their efforts to reduce particle emissions. |
In June 2021, Rotem Israel's emission permit was renewed by the Israeli Ministry of Environmental Protection (MoEP), which is valid until September 2023. The renewed permit reflects an updated outline of requirements. Postponement in the execution of a limited number of projects was granted within the framework of an administrative order under Section 45 of the Law.
By the end of 2021, Rotem Israel had completed 77 of 194 specific tasks required by the permit. Rotem Israel is striving to implement the requirements of the permit through a multi-year plan that includes several significant emissions reduction projects. Management still expects difficulties in meeting the execution schedules of a limited number of projects and accordingly continues to work with the MoEP to find a satisfactory solution regarding the timing of the investments, taking into account the impact of uncertainty surrounding Rotem Israel's activity, as far as the implementation of long-term projects is concerned. For more information, see Note 18 to our Audited Financial Statements.
Europe
In Europe, emissions are regulated under the EU IED – Industrial Emission Directive, as well as regional and local regulations. Preventive measures and Best Available Technology (BAT) are applied. These regulations are translated to national legislation. Emission limit values for relevant substances are included as part of the authority's approval. Rules guarantee protection of air, soil and water. In addition, in Europe relevant emissions control is conducted by authority inspection through independent technical supervisory associations and by self-inspection. Relevant plants in the EU are subject to the European SEVESO directive, which requires regular safety inspections and prepare reports.
Americas
Air emissions in the Americas are managed through operating permits issued by the relevant agency responsible for each individual site. In the US, air permits are issued under the authority of the US Environmental Protection Agency’s (EPA) Clean Air Act. In Brazil, air emissions are managed under the site’s operation license issued by the relevant state environmental agency.
China
Air emissions in China are regulated in accordance with the Law of the People's Republic of China on the Prevention and Control of Atmospheric Pollution and the Regulations on the Management of Pollutant Discharge Permits.
| • | SBCL – Bromine leakage occurred during January 2022. According to the guidance of local authorities, production onsite was halted. Corrective actions were taken. Production activity is expected to resume by mid – March, following the approval by authorities. |
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Water
We regard potable water as a high-value natural resource. Several of our major production sites are located in water-stressed regions. Water conservation is therefore an inherent part of our business culture. Our production facilities maintain various water conservation projects, including using brackish water and recycling treated wastewater. We track the consumption of water at our facilities worldwide and promote the implementation of water efficiency projects.
We expect potable water to become scarcer in the future across the globe. As water scarcity becomes a pressing issue due to climate change and other factors, we expect greater and stricter regulation of water consumption and wastewater quality. We also anticipate that we will need to invest additional resources to enhance our water efficiency and wastewater quality at several of our plants.
Several of our major production facilities are located in Israel. The country, though located in a water-stressed region, manages its water resources efficiently. Desalination plants and Reverse Osmosis (RO) plants are major contributors to the country’s potable water resources, thereby reducing potable water scarcity in the country. In addition, industrial facilities, such as our facilities in Sodom, are allowed to use non-potable water where possible.
Further information about water related issues in Israel, see Notes 17 and 18 to our Audited Financial Statements.
Wastewater, By-products, Waste & Hazardous Waste
We track and manage our waste streams and take various steps to reduce waste. We identify and seek to maximize potential reuse and recycling of relevant waste streams and are proactive in searching for ‘circular economy’ opportunities. For further information, see the “Circular Economy” section above. During production processes at our facilities, industrial liquid and solid wastes are produced. Storage, transportation, reuse and disposal of waste are generally regulated by governmental authorities in the countries in which we operate. Wastewater quality and quantities must comply with local regulations and with permits at relevant sites. We strive to implement zero discharge policies where applicable. Various production sites have adapted their treatment systems to the standards applicable to them. We track and manage our waste streams and take various steps to reduce waste or identify and maximize potential reuse and recycling of relevant waste. Most of the waste is either directly treated by us or treated by external certified vendors.
Although we strive to reduce the likelihood of wastewater leakages or solid waste and hazardous materials unexpected releases, we may not always succeed to prevent such incidents, which may occur, among other things, due to various factors that are not within our control. In the event of difficulties in the reuse or disposal of waste generated in our facilities, interruptions or production stoppage may occur and significant costs may be imposed. If we cannot properly mitigate and reduce the exposure, our operations may be adversely and materially affected.
For further information, see “Item 3 - Key Information— D. Risk Factors— As a leading global specialty minerals company the nature of our activities means that we are inherently exposed to hazards relating to materials, processes, production and mining" and “Item 3 - Key Information— D. Risk Factors— Our 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”.
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Israel
Liquid and solid waste and other emissions are regulated by multiple regulations. Our plants in Israel implement waste monitoring and management measures. Each plant is required to inform the authorities on the amount of waste and treatment method for every waste stream under Israel’s PRTR (Pollutant Release and Transfer Register) regulation. Wastewater regulations, including effluent limits, are regulated by the MoEP and partly by local authorities.
Pursuant to the conditions set by the MoEP in their Toxins Permits, our plants in Israel have conducted historical land contamination surveys and submitted them to the MoEP.
ICL Dead Sea (DSW) - Salt by-product is transferred to a large open-air depot, in proximity to DSW’s site. The open-air depot's dimensions (height and area) are limited by statutory requirements. DSW is examining alternatives for salt storage/treatment.
Rotem Israel – The site is implementing a master plan for wastewater treatment, with the principal goal of reducing effluent quantities, by converting some effluents into products, wastewater recycling, reducing water consumption, treatment/neutralization of wastewater and restoration of wastewater ponds. The plan currently includes additional wastewater streams created by air emission purification processes, as required by the Israeli Clean Air Law.
As part of its treatment of liquid and solid waste, the site treats gypsum waste by ponds and storage. In September 2021, the authorities approved a gypsum storage comprehensive plan that would allow the Company to store gypsum for the next 30 years. In addition, the plan allows the use of “Pond 5”, which has been operating since 2018, until the end of its operational life, expected in 2024. The Company began planning the remediation of gypsum Ponds 1 to 3 that were used by Rotem Israel in the past. In accordance with current regulatory requirements, future expansion of the storage piles will need to be positioned on new protective infrastructure. Another requirement is the establishment of restoration methodologies for these large storage piles. Rotem Israel is planning to comply with these requirements and is striving to find alternative uses for the gypsum with external industry partners. For further information, see Note 18 to our Audited Financial Statements.
The Rotem site has also completed the implementation of a multi‑year master plan to prevent ground pollution by fuels or oils.
| • | Neot Hovav - Pursuant to the requirements of the MoEP, in the coming years our Neot Hovav site will be required to treat existing hazardous waste (historical). This waste is stored in a designated defined area on the site's premises, in coordination with the MoEP. Some of the currently produced waste is also stored in this area. Treatment of this waste is partly conducted through a combustion facility (Bromine Recovery Unit), which recovers hydro-bromine acid. Additional waste quantities are sent to external designated treatment facilities. Once the area is cleared, the Company will be required to conduct soil surveys. For further information, see Note 17 to our Audited Financial Statements. |
ICL Periclase - The site is working to reduce historic Magnesia waste, stored in a designated waste area, and to reuse it for the benefit of a circular economy. ICL Periclase is implementing a project that uses magnesia powder, a non-hazardous material, to fill sinkholes in the Dead Sea region. The project is expected to be completed by January 2023.
ICL Haifa (F&C) – Treated wastewater of the site's facilities flows into the Kishon River, according to a permit issued by the MoEP. To comply with the standards covering treatment of the wastewater, the site, in coordination with the MoEP, is conducting a project to channel the treated wastewater underground. This project is in advanced stages.
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Following laboratory tests that were performed at the site, the MoEP raised a concern regarding local underground water pollution. Therefore, the ICL Haifa site was given two alternatives - sealing the existing runoff pond, or building a new pond. After a thorough examination of the two alternatives, the site decided to build a new pond to reduce the risk to which the plant is exposed.
The production process of phosphoric acid produced in the 1990’s at a facility which has since been shut down, has created a by-product in the form of a gypsum pile which is stored at the site. The site is working in coordination with the MoEP and taking the necessary actions according to regulatory requirements, including the Toxins Permit issued to the site.
Europe
Liquid and solid waste and emissions are regulated under the European IED – Industrial Emission Directive. The Company implements waste monitoring and other management measures. It is obligated to inform the authorities of the results. Wastewater regulations, including effluent limits, are regulated by states and partly by communities. We are subject to provisions regarding the avoidance of pollution and conditions for assessing compliance with emission limit values.
Wastewater is partly pre-treated and sent to municipalities and third parties for final treatment before discharge, or at levels that can be discharged to surface waters without treatment. Production processes, in general, do not generate significant volumes of direct solid waste. In event that solid waste must be disposed, we strive to perform in accordance with relevant European requirements.
ICL Boulby - All wastewater leaving our site in the UK is permitted according to the UK’s Environment Agency. The site's wastewater consists of extracted sea water, mine brines, gathered surface rainwater and water treated at the on-site sewage plant. Multiple parameter limits are imposed on the site by the wastewater permit, and no compliance breaches have occurred since the site’s transition to producing Polysulphate®, and, in fact, wastewater amounts have been reduced considerably.
ICL Iberia - A multi-year program is underway to restore large salt piles, while paying close attention to the issue of wastewater drainage and sludge treatment. In April 2021, the Company signed an agreement with the ACA, Catalan Water Agency, for the construction and operation of a new collector. The new collector is infrastructure required for the removal of brine water that will be used for restoration, as well as for production. For further information regarding the restoration plan and the agreement for the construction and operation of the collector in Spain, see Notes 17 and 18 to our Audited Financial Statements.
ICL Iberia has also successfully passed the audit for the certification of UNE 22470 and 22480 standards, which accredited ICL Iberia as a sustainable mining company. ICL Iberia is also engaged in a program regarding non-mining waste management to valorize and reduce its waste, in accordance with local and European waste management.
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Americas
Liquid and solid wastes at our Americas sites are managed in accordance with country and state-specific regulatory requirements. In the US, solid and hazardous wastes are regulated by the Environmental Protection Agency’s (EPA) Resource Conservation and Recovery Act. In Brazil, waste is managed under the site’s operation license issued by the relevant state environmental agency.
ICL follows a qualification process for waste vendors who assist us in ensuring that waste is properly profiled, treatment standards are followed, and disposal processes meet regulatory requirements. Wastewater is managed through site industrial discharge permits that are managed through federal, state or local agencies. Wastewater treatment is mainly focused on chemical treatment. Wastewater treatment systems are maintained on a regular basis.
ICL US Gallipolis Ferry - The site operates under a National Pollutant Discharge Elimination System (NPDES) Permit which regulates water discharge from point sources and is renewed every 5 years. The site operates a large Wastewater Treatment Plant (WWTP). Discharge limitations, set by the West Virginia Department of Environmental Protection (WVDEP), are becoming stricter, placing a challenge on the treatment capabilities for some parameters being treated within the current WWTP. Therefore, in 2021 the site installed new technology for its wastewater treatment processes. The site has been very active in pursuing recycling initiatives, which helped achieve a landfill to recycling ratio of 50%. Additionally, the facility entered into a Voluntary Remediation Agreement (VRA) with the former owner of the facility, and the WVDEP. The active remediation has been completed and is being reviewed by the WVDEP for approval. Currently, there is ongoing periodic groundwater sampling, analysis, monitoring, and reporting to the WVDEP, per the VRA.
China
According to the Law of the People's Republic of China on the Prevention and Control of Solid Waste Pollution and the National Catalogue of Hazardous Waste, solid waste is collected, stored and transferred. General industrial solid waste is entrusted for comprehensive utilization by qualified organizations, and hazardous waste is entrusted for treatment by organizations with a Hazardous Waste Business License issued by the Department of Ecological Environment of Yunnan Province.
| • | YPH- All wastewater at YPH, after physical or chemical treatment, is reused in the production system with zero discharge. |
LYG - During 2021, ICL ceased operations at its LYG plant following a request by the Chinese authorities to either relocate the plant or cease its operation. As part of the closure process, soil surveys were conducted. Once concluded, ICL is expected to receive compensation due to the closure.
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Ecological Impact
We manage our mineral extraction sites according to local regulations and depend on concessions that are granted to us. Our broad and varied operations cover the entire lifecycle of our products, from the initial production of raw materials through manufacture of the final product. This is becoming more challenging as the population grows in proximity to our sites. To try to minimize any unexpected disturbances by our facilities to their surrounding communities, we have increased our efforts to take precautions and safety measures in our activities, especially those which involve hazardous materials.
We aim to minimize the ecological impact of both our mining and production activities, beginning at the initial stage of planning, through the implementation of recommendations and finally by monitoring and minimizing their impact. We continuously implement relevant operational methodologies and necessary technologies to prevent unexpected ecological impact. In the event of an ecological impact, we strive to mitigate and remediate the impact, in accordance with best practices and regulatory requirements, including by coordination with the relevant local authorities. For further information, see “Item 3 - Key Information— D. Risk Factors— As a leading global specialty minerals company the nature of our activities means that we are inherently exposed to hazards relating to materials, processes, production and mining".
It should be noted that our Sodom production facility is located in the Jordan Rift Valley, or Syro-African Depression, a seismically active area. For further information, see “Item 3 - Key Information— D. Risk Factors— The locations of some of our mines and facilities expose us to various natural disasters, including as a result of climate change".
| • | ICL DSW – Due to the negative water balance, the water level in the northern basin of the Dead Sea is decreasing. The receding water levels over the years has required ICL to reposition its pumping station northwards, in order to enable continued operations in the Dead Sea region, which also enables the existence of tourism infrastructure. The P-9 pumping station and feeder canal crossing the Tze’elim stream were constructed in order to maintain operational continuity. The Tze’elim stream alluvial fan is one of the largest and most developed of all the surviving fans in the area, and therefore it is important to preserve it and to protect the biodiversity existing in this habitat. ICL reached an agreement with environmental authorities and organizations, according to which, seven culverts were constructed above the excavated canalto allow flood waters to flow through the original flow channel, without damaging the feeder canal,while maintaining the braided channel fan pattern. In addition, the culverts serve as an ecological corridor, by providing passageways for animals. ICL periodically reviews field data and makes adjustments in accordance with the findings. For further information, see “Item 4 – Information on the company — D. Property, Plant and Equipment — Mineral Extraction and Mining Operations- Dead Sea”. |
| • | ICL Iberia - ICL Iberia’s past activities have resulted in the salinization of some water wells in the Suria and Sallent sites. Compensation to the relevant owners is under discussion. For more information, seenote 17 to our Audited Financial Statements. |
Rotem Israel - In 2017, Rotem experienced an environmental accident in which approximately 100,000 cubic meters of acidic phosphogypsum liquid were released into the surrounding environment, as a result of a breach in its Number 3 detainment pond. The liquid entered the nearby Ashalim Creek (Nahal Ashalim), which flows through an area designated as a nature reserve. To the best of our knowledge, as of the reporting date, criminal investigation of the event is still underway. We took intensive actions to restore the creek, to its state prior to the accident, in full cooperation with the relevant authorities.
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Following the incident, the Israel Nature and Parks Authority (INPA) closed the nature reserve to the public. We conducted a risk assessment process of the creek, together with leading experts. The assessment was meant to assure that the creek’s hiking trails can be reopened and do not pose risks to hikers' health. The assessment was completed in late 2019 and the results were presented to the authorities. All risk levels were found to be acceptable, and in June 2020, the Ashalim Creek was reopened for hikers. For further information, see Note 18 to our Audited Financial Statements.
Rotem Israel is in a process to remediate its gypsum ponds, based on a remediation plan that was established following the ‘Florida Standard’ and approved in 2020. The remediation work, which commenced in September 2020, was stalled due to discussions with the MoEP regarding the approval of landscape restoration. Discussions are still on going, but Rotem Israel expects to resume remediation process during 2022. In addition, Rotem Israel is designing a remediation action plan for its acidic wastewater ponds.
In 2020, an application for a class action was filed against the Company, according to which, discharge, leakage and seepage of wastewater from Rotem's Zin site, allegedly caused various environmental hazards to the Zin stream, which resulted in damages. For future information, see Note 18 to our Audited Financial Statements.
Part of the environmental challenges Rotem Israel is facing and handling, including certain environmental class actions against the Company, pertaining to environmental damages originating in the period that the Company was owned by the Israeli government, prior to its privatization.
ICL R&D Beer Sheva - A soil survey was conducted. The initial results of the survey point to small amounts of contamination. ICL will act in accordance with the survey's findings, and related MoEP guidelines.
lCL Periclase - In 2021, brine, a non-hazardous substance, leaked from a ruptured pipeline in a nature reserve. No significant damage was recorded, and we are in the process of remediating the area. We committed to testing and replacing the necessary pipeline components, in order to prevent future occurrences.
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Biodiversity
Biodiversity, also called biological diversity, is the variety of life found in a place on Earth. A common measure of this variety, called species richness, is the count of species in an area. We recognize the need to consider environmental factors when using land and managing our operations, particularly in ecologically sensitive areas, including areas with unique cultural value. We are committed to ongoing consideration of the impact of our activities on biodiversity in our decision making.
Examples regarding our management of biodiversity at some of our mining sites includes the following:
ICL DSW - Sodom Saltmarsh Lake. The Ashalim reservoir, located south of the ICL’s Dead Sea site, is a wet habitat, situated within a typical arid habitat. It is abundant with rich biological diversity. ICL Dead Sea, whose excavations in the region created this wet habitat, takes extra measures to preserve it and invests in making this unique habitat accessible to the public. In the past, the Sodom salt flats area was a resting stop and habitat for migratory birds. Today, due to changes in the land’s use – to agriculture, residential and industrial purposes, almost no salt flats remain. These flats have unique characteristics with high salinity in the soil and unique species that have adapted to these extreme conditions. The salt flats in Israel are a rare habitat and have been shrinking over time. The Sodom Saltmarsh Lake, initially created as a result of ICL Dead Sea’s excavation activities, has become a salt flat substitute. The lake was created from a rise in groundwater in the excavated area. Over the past few years, the lake has had relatively good water quality year-round. We also started monitoring the lake, using sensors, to continuously measure its water quality. Vegetation was planted in a stable water environment. The lake is now used as a resting spot for migrating birds and as a nesting site for a wide range of species.
| • | ICL Boulby - Adjacent to ICL Boubly’s mining facilities, and within its operational area, are non-developed turfs where important habitats and species flourish. Most notable are the woodlands at Mines Wood and Ridge Lane Wood, near Dalehouse. These are some of the most wildlife-rich woodlands in the Northeast England / Yorkshire areas. The woodlands are home to invertebrates, birds and mammals. For over a decade ICL Boulby has worked with the Industry Nature Conservation Association (INCA) to monitor and manage the wildlife that exists in proximity to the mine. Key to this process is a Site Biodiversity Action Plan (Site BAP), operated by ICL Boulby within its operational area. The site BAP is designed to conserve the key habitats and species which live at the site, and is assisted by INCA annually.For further information see: “Item 4 – Information on the Company — D. Property, Plant and Equipment — Mineral Extraction and Mining Operations” and Note 18(c) to our Audited Financial Statements. |
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Hazardous Substances
Some of the substances used at our facilities across the world (such as raw materials, etc.) are considered as hazardous substances. These substances require governmental approvals and registration. Relevant safety measures and procedures for storage and handling are implemented and maintained. Measures are taken to reduce the likelihood and the potential severity of incidents in case of an exposure to hazardous materials. This includes risk assessment, training, personal protective equipment (PPEs) and other relevant mitigation measures for employees and contractors. In addition, suppliers, transporters and vendors are qualified for proper handling of these materials.
Israel
As part of our operations in Israel, we produce, store, transport and use materials that are defined as hazardous materials according to the Israeli Hazardous Substances Law, 1993. Handling such substances requires a special permit for hazardous material from the MoEP ("Toxins Permit") that is renewed annually. All our Israeli companies have a Toxins Permit, as required by law, and they operate according to the special conditions defined in these permits. Leakage or loss of control of these materials could result in an environmental incident and cause damage to people and/or to the environment. We take measures to prevent such occurrences, and, at the same time, we prepare for such occurrences by means of emergency teams training and appropriate equipment for dealing with these types of events.
Europe
Some of the substances used in our European facilities (such as raw materials) are considered hazardous substances. Required approvals and registrations for these substances are secured and maintained. Relevant safety measures and procedures for storage and handling are also implemented and maintained. In addition to these measures, we only use qualified suppliers and transport companies, while qualification and training of employees is conducted on a regular basis. All requirements based on the GHS (Globally Harmonized System of Classification, Labelling and Packaging of Chemicals) are acquired and maintained.
Americas
Hazardous substances are utilized at ICL’s facilities in the Americas as raw materials and can also be found as finished products. Where required, registrations for the storage, handling and transportation of these materials are secured and maintained. Measures are taken to reduce the likelihood of releases of hazardous materials by way of supplier and transporter qualification, as well as training of employees, contractors and vendors on the proper handling of these materials.
China
Hazardous substances are utilized at our facilities in China as raw materials and can also be found as finished products. Where required, registrations for the storage, handling and transportation of these materials are secured and maintained. Measures are taken to reduce the likelihood of releases of hazardous materials by way of supplier and transporter qualification, training of employees, contractors and vendors on the proper handling of these materials.
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Limitation Regulation and Registration of our Products
As a global specialty minerals company, we are subject to multiple rules and regulations in terms of product safety. We ensure that the substances we produce, and sell, are handled in accordance with all such rules and regulations throughout their life cycle. These rules and regulations, among other things, impose limitations on the use of specific substances and products, require us to register and label some of our products and more. We continuously monitor these rules and regulations and take the necessary operational measures to ensure that we remain in material compliance with them.
New European Fertilizer Product Regulation
One of the future regulatory changes that may impact our products is the new European Fertilizing Product Regulation (FPR, formerly known as NFR), which was published in in 2019, with an effective date of July 2022. FPR covers a broad scope of materials, including all types of fertilizers, liming materials, biostimulants, growing media, soil improvers, inhibitors and other blends of these materials. The new future European Fertilizers Regulation, which is still in progress, will requireregulation requires fertilizer producers to monitor new contaminating elements in fertilizer products and for this purpose, additional analytical and monitoring methods will be incorporated to comply.products. In addition, pursuant to the new Law,FPR, fertilizer producers will have to demonstrate the ability to track their products to ensure thetheir quality thereof in the production and supply chain.
New Chinese Polysulphate standard
A new industry standard for Polysulphate (as a fertilizer) was recently published in January 2019 by ECHAChina. We are examining how this new standard may affect the supply of Polysulphate to the Chinese market and will be open for public consultation.
the options to meet its requirements.The Toxic Substances Control Actremaining step in this transition is to transition away from the combustion of 1976 (TSCA), addressesshale oil at our Rotem Israel site. In 2021, we ceased extracting shale oil minerals and commenced the production, importation, use,construction of a new NG-fired turbine installation. We expect this new facility to commence operations in 2022, significantly reducing our emissions of GHG (and other pollutants) at the Rotem Israel site.
For more information regarding natural gas agreements, see Note 18 to our Audited Financial Statements and disposal of specific chemicals"Item 3 – Key Information - D. Risk Factors - Our operations could be adversely affected by price increases or shortages with respect to water, energy and our principal raw materials".
The European Energy Efficiency Directive (EED)
In July 2021, the European Commission published a proposal to recast the EU Directive on Energy Efficiency, aimed at further stimulating efforts to promote energy efficiency and achieve energy savings in the USA. The TSCA is administered by the US Environmental Protection Agency (EPA) that regulates the introduction of new and existing chemicals.
Air Quality
Israel
(hereinafter - the Law) which aims to improve air quality, prevent, and reduce air pollution by implementing both prohibitions and obligations, and protect the health and quality of life of human beings and the environment. The Clean Air Law addresses inter alia, fixedemission sources (including the Company’s plants)all our production plants in Israel) and is intended to serve as a platform for implementing the IPPC directiveregulatory principles currently in place in the European Union (EU), specifically the principles of the IED (The Industrial Emissions Directive) that was adopted by the European Union in 1996.EU.
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| • | DSW and DSM will implement major dust reduction projects over the next few years. Our other production sites in Israel will also increase their efforts to reduce particle emissions. |
In June 2021, Rotem Israel's emission permit was renewed by the Company’s production processes, pollutants are emitted,Israeli Ministry of Environmental Protection (MoEP), which could be harmful to people or tois valid until September 2023. The renewed permit reflects an updated outline of requirements. Postponement in the environment if they were to be emitted intoexecution of a limited number of projects was granted within the environment in concentrations or amounts exceeding the permitted levels. The materials emitted are mainly inorganic compounds and particles and a minorityframework of volatile organic compounds. The Company regularly and continuously measures the emission of these pollutants inan administrative order to monitor and locate uncontrolled emissions, in accordance with the provisionsunder Section 45 of the law and the conditions set forth in the business licenses and emission permits. The Company is advancing execution of projects to reduce emissions into the atmosphere in accordance with the terms of the emission permits.Law.
Europe
In Europe, emissions are regulated under the EU IED – Industrial Emission Directive.Directive, as well as regional and local regulations. Preventive measures and Best Available TechnologiesTechnology (BAT) are applied. These regulations are translated to national legislation. Emission limit values for relevant substances are included as part of our authority approvals. There are rules guaranteeingthe authority's approval. Rules guarantee protection of air, soil and water. In addition, in Europe relevant emissions control is conducted by authority inspection through independent technical supervisory associations and by self-inspection. ICLRelevant plants falling underin the EU are subject to the European SEVESO directive, conductwhich requires regular safety inspections and prepare reports.
Americas
Air emissions in the Americas are managed through operating permits issued by the relevant agency responsible for each individual site. In the United States,US, air permits are issued under the authority of the US EPA’sEnvironmental Protection Agency’s (EPA) Clean Air Act. In Mexico, air emissions are managed through the site’s single environmental license or the LAU issued by SEMARNAT. In Brazil, air emissions are managed under the site’s operation license issued by the Sao Paulo Staterelevant state environmental agency – CETESB.
China
| • | SBCL – Bromine leakage occurred during January 2022. According to the guidance of local authorities, production onsite was halted. Corrective actions were taken. Production activity is expected to resume by mid – March, following the approval by authorities. |
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Water
We regard potable water as a high-value natural resource. Several of our major production sites are located in water-stressed regions. Water conservation is tested once every six monthstherefore an inherent part of our business culture. Our production facilities maintain various water conservation projects, including using brackish water and recycling treated wastewater. We track the consumption of water at our facilities worldwide and promote the implementation of water efficiency projects.
We expect potable water to become scarcer in the future across the globe. As water scarcity becomes a pressing issue due to climate change and other factors, we expect greater and stricter regulation of water consumption and wastewater quality. We also anticipate that we will need to invest additional resources to enhance our water efficiency and wastewater quality at several of our plants.
Several of our major production facilities are located in Israel. The country, though located in a water-stressed region, manages its water resources efficiently. Desalination plants and Reverse Osmosis (RO) plants are major contributors to the country’s potable water resources, thereby reducing potable water scarcity in the country. In addition, industrial facilities, such as our facilities in Sodom, are allowed to use non-potable water where possible.
Further information about water related issues in Israel, see Notes 17 and 18 to our Audited Financial Statements.
Wastewater, By-products, Waste & Hazardous Waste
We track and manage our waste streams and take various steps to reduce waste. We identify and seek to maximize potential reuse and recycling of relevant waste streams and are proactive in searching for ‘circular economy’ opportunities. For further information, see the “Circular Economy” section above. During production processes at our facilities, industrial liquid and solid wastes are produced. Storage, transportation, reuse and disposal of waste are generally regulated by governmental authorities in the Center for Environmental Protection regarding gas emissions. In the phosphate plant, the Company has adapted its facilities by means of installation of systems monitoring gas emissionscountries in order towhich we operate. Wastewater quality and quantities must comply with local regulations and regulatory schemes. Thewith permits at relevant sites. We strive to implement zero discharge policies where applicable. Various production sites have adapted their treatment systems to the standards applicable to them. We track and manage our waste streams and take various steps to reduce waste or identify and maximize potential reuse and recycling of relevant waste. Most of the waste is either directly treated by us or treated by external certified vendors.
Although we strive to reduce the likelihood of wastewater leakages or solid waste and hazardous materials unexpected releases, we may not always succeed to prevent such incidents, which may occur, among other things, due to various factors that are not within our control. In the event of difficulties in the reuse or disposal of waste generated in our facilities, interruptions or production stoppage may occur and significant costs may be imposed. If we cannot properly mitigate and reduce the exposure, our operations may be adversely and materially affected.
For further information, see “Item 3 - Key Information— D. Risk Factors— As a leading global specialty minerals company the nature of our activities means that we are inherently exposed to hazards relating to materials, processes, production and mining" and “Item 3 - Key Information— D. Risk Factors— Our 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”.
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Israel
Liquid and solid waste and other emissions are regulated by multiple regulations. Our plants in Israel implement waste monitoring and management measures. Each plant is required to inform the authorities on the amount of waste and treatment method for every waste stream under Israel’s PRTR (Pollutant Release and Transfer Register) regulation. Wastewater regulations, including effluent limits, are regulated by the MoEP and partly by local authorities.
Pursuant to the conditions set by the MoEP in their Toxins Permits, our plants in Israel have conducted historical land contamination surveys and submitted them to the MoEP.
ICL Dead Sea (DSW) - Salt by-product is transferred to a large open-air depot, in proximity to DSW’s site. The open-air depot's dimensions (height and area) are limited by statutory requirements. DSW is examining alternatives for salt storage/treatment.
Rotem Israel – The site is implementing a master plan for wastewater treatment, with the principal goal of reducing effluent quantities, by converting some effluents into products, wastewater recycling, reducing water consumption, treatment/neutralization of wastewater and restoration of wastewater ponds. The plan currently includes additional wastewater streams created by air emission purification processes, as required by the Israeli Clean Air Law.
As part of its treatment of liquid and solid waste, the site treats gypsum waste by ponds and storage. In September 2021, the authorities approved a gypsum storage comprehensive plan that would allow the Company to store gypsum for the next 30 years. In addition, the plan allows the use of “Pond 5”, which has been operating since 2018, until the end of its operational life, expected in 2024. The Company began planning the remediation of gypsum Ponds 1 to 3 that were used by Rotem Israel in the past. In accordance with current regulatory requirements, future expansion of the storage piles will need to be positioned on new protective infrastructure. Another requirement is the establishment of restoration methodologies for these large storage piles. Rotem Israel is planning to comply with these requirements and is striving to find alternative uses for the gypsum with external industry partners. For further information, see Note 18 to our Audited Financial Statements.
The Rotem site has also completed the implementation of a multi‑year master plan to prevent ground pollution by fuels or oils.
| • | Neot Hovav - Pursuant to the requirements of the MoEP, in the coming years our Neot Hovav site will be required to treat existing hazardous waste (historical). This waste is stored in a designated defined area on the site's premises, in coordination with the MoEP. Some of the currently produced waste is also stored in this area. Treatment of this waste is partly conducted through a combustion facility (Bromine Recovery Unit), which recovers hydro-bromine acid. Additional waste quantities are sent to external designated treatment facilities. Once the area is cleared, the Company will be required to conduct soil surveys. For further information, see Note 17 to our Audited Financial Statements. |
ICL Periclase - The site is working to reduce historic Magnesia waste, stored in a designated waste area, and to reuse it for the benefit of a circular economy. ICL Periclase is implementing a project that uses magnesia powder, a non-hazardous material, to fill sinkholes in the Dead Sea region. The project is expected to be completed by January 2023.
ICL Haifa (F&C) – Treated wastewater of the site's facilities flows into the Kishon River, according to a permit issued by the MoEP. To comply with the standards covering treatment of the wastewater, the site, in coordination with the MoEP, is conducting a project to channel the treated wastewater underground. This project is in advanced stages.
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Following laboratory tests that were performed at the site, the MoEP raised a concern regarding local underground water pollution. Therefore, the ICL Haifa site was given two alternatives - sealing the existing runoff pond, or building a new pond. After a thorough examination of the two alternatives, the site decided to build a new pond to reduce the risk to which the plant is exposed.
The production process of phosphoric acid produced in the 1990’s at a facility which has since been shut down, has created a by-product in the form of a gypsum pile which is stored at the site. The site is working in coordination with the MoEP and taking the necessary actions according to regulatory requirements, including the Toxins Permit issued to the site.
Europe
Liquid and solid waste and emissions are regulated under the European IED – Industrial Emission Directive. The Company implements waste monitoring and other management measures. It is obligated to inform the authorities of the results. Wastewater regulations, including effluent limits, are regulated by states and partly by communities. We are subject to provisions regarding the avoidance of pollution and conditions for assessing compliance with allemission limit values.
Wastewater is partly pre-treated and sent to municipalities and third parties for final treatment before discharge, or at levels that can be discharged to surface waters without treatment. Production processes, in general, do not generate significant volumes of direct solid waste. In event that solid waste must be disposed, we strive to perform in accordance with relevant European requirements.
ICL Boulby - All wastewater leaving our site in the lawsUK is permitted according to the UK’s Environment Agency. The site's wastewater consists of extracted sea water, mine brines, gathered surface rainwater and regulations.water treated at the on-site sewage plant. Multiple parameter limits are imposed on the site by the wastewater permit, and no compliance breaches have occurred since the site’s transition to producing Polysulphate®, and, in fact, wastewater amounts have been reduced considerably.
ICL Iberia - A multi-year program is underway to restore large salt piles, while paying close attention to the issue of wastewater drainage and sludge treatment. In April 2021, the Company signed an agreement with the ACA, Catalan Water Agency, for the construction and operation of a new collector. The new collector is infrastructure required for the removal of brine water that will be used for restoration, as well as for production. For further information regarding the restoration plan and the agreement for the construction and operation of the collector in Spain, see Notes 17 and 18 to our Audited Financial Statements.
ICL Iberia has also successfully passed the audit for the certification of UNE 22470 and 22480 standards, which accredited ICL Iberia as a sustainable mining company. ICL Iberia is also engaged in a program regarding non-mining waste management to valorize and reduce its waste, in accordance with local and European waste management.
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Americas
Liquid and solid wastes at our Americas sites are managed in accordance with country and state-specific regulatory requirements. In the US, solid and hazardous wastes are regulated by the Environmental Protection Agency’s (EPA) Resource Conservation and Recovery Act. In Brazil, waste is managed under the site’s operation license issued by the relevant state environmental agency.
ICL follows a qualification process for waste vendors who assist us in ensuring that waste is properly profiled, treatment standards are followed, and disposal processes meet regulatory requirements. Wastewater is managed through site industrial discharge permits that are managed through federal, state or local agencies. Wastewater treatment is mainly focused on chemical treatment. Wastewater treatment systems are maintained on a regular basis.
ICL US Gallipolis Ferry - The site operates under a National Pollutant Discharge Elimination System (NPDES) Permit which regulates water discharge from point sources and is renewed every 5 years. The site operates a large Wastewater Treatment Plant (WWTP). Discharge limitations, set by the West Virginia Department of Environmental Protection (WVDEP), are becoming stricter, placing a challenge on the treatment capabilities for some parameters being treated within the current WWTP. Therefore, in 2021 the site installed new technology for its wastewater treatment processes. The site has been very active in pursuing recycling initiatives, which helped achieve a landfill to recycling ratio of 50%. Additionally, the facility entered into a Voluntary Remediation Agreement (VRA) with the former owner of the facility, and the WVDEP. The active remediation has been completed and is being reviewed by the WVDEP for approval. Currently, there is ongoing periodic groundwater sampling, analysis, monitoring, and reporting to the WVDEP, per the VRA.
China
According to the Law of the People's Republic of China on the Prevention and Control of Solid Waste Pollution and the National Catalogue of Hazardous Waste, solid waste is collected, stored and transferred. General industrial solid waste is entrusted for comprehensive utilization by qualified organizations, and hazardous waste is entrusted for treatment by organizations with a Hazardous Waste Business License issued by the Department of Ecological Environment of Yunnan Province.
| • | YPH- All wastewater at YPH, after physical or chemical treatment, is reused in the production system with zero discharge. |
LYG - During 2021, ICL ceased operations at its LYG plant following a request by the Chinese authorities to either relocate the plant or cease its operation. As part of the closure process, soil surveys were conducted. Once concluded, ICL is expected to receive compensation due to the closure.
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Ecological Impact
We manage our mineral extraction sites according to local regulations and depend on concessions that are granted to us. Our broad and varied operations cover the entire lifecycle of our products, from the initial production of raw materials through manufacture of the final product. This is becoming more challenging as the population grows in proximity to our sites. To try to minimize any unexpected disturbances by our facilities to their surrounding communities, we have increased our efforts to take precautions and safety measures in our activities, especially those which involve hazardous materials.
We aim to minimize the ecological impact of both our mining and production activities, beginning at the initial stage of planning, through the implementation of recommendations and finally by monitoring and minimizing their impact. We continuously implement relevant operational methodologies and necessary technologies to prevent unexpected ecological impact. In the event of an ecological impact, we strive to mitigate and remediate the impact, in accordance with best practices and regulatory requirements, including by coordination with the relevant local authorities. For further information, see “Item 3 - Key Information— D. Risk Factors— As a leading global specialty minerals company the nature of our activities means that we are inherently exposed to hazards relating to materials, processes, production and mining".
It should be noted that our Sodom production facility is located in the Jordan Rift Valley, or Syro-African Depression, a seismically active area. For further information, see “Item 3 - Key Information— D. Risk Factors— The locations of some of our mines and facilities expose us to various natural disasters, including as a result of climate change".
| • | ICL DSW – Due to the negative water balance, the water level in the northern basin of the Dead Sea is decreasing. The receding water levels over the years has required ICL to reposition its pumping station northwards, in order to enable continued operations in the Dead Sea region, which also enables the existence of tourism infrastructure. The P-9 pumping station and feeder canal crossing the Tze’elim stream were constructed in order to maintain operational continuity. The Tze’elim stream alluvial fan is one of the largest and most developed of all the surviving fans in the area, and therefore it is important to preserve it and to protect the biodiversity existing in this habitat. ICL reached an agreement with environmental authorities and organizations, according to which, seven culverts were constructed above the excavated canalto allow flood waters to flow through the original flow channel, without damaging the feeder canal,while maintaining the braided channel fan pattern. In addition, the culverts serve as an ecological corridor, by providing passageways for animals. ICL periodically reviews field data and makes adjustments in accordance with the findings. For further information, see “Item 4 – Information on the company — D. Property, Plant and Equipment — Mineral Extraction and Mining Operations- Dead Sea”. |
| • | ICL Iberia - ICL Iberia’s past activities have resulted in the salinization of some water wells in the Suria and Sallent sites. Compensation to the relevant owners is under discussion. For more information, seenote 17 to our Audited Financial Statements. |
Rotem Israel - In 2017, Rotem experienced an environmental accident in which approximately 100,000 cubic meters of acidic phosphogypsum liquid were released into the ammonia complex,surrounding environment, as a result of a breach in its Number 3 detainment pond. The liquid entered the nearby Ashalim Creek (Nahal Ashalim), which was located nearflows through an area designated as a nature reserve. To the residential area proximatebest of our knowledge, as of the reporting date, criminal investigation of the event is still underway. We took intensive actions to restore the creek, to its state prior to the plant, was movedaccident, in full cooperation with the relevant authorities.
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Following the incident, the Israel Nature and Parks Authority (INPA) closed the nature reserve to the plant’s premises.
public. We conducted a risk assessment process of the creek, together with leading experts. The assessment was meant to assure that the creek’s hiking trails can be reopened and do not pose risks to hikers' health. The assessment was completed in late 2019 and the results were presented to the authorities. All risk levels were found to be acceptable, and in June 2020, the Ashalim Creek was reopened for hikers. For further information, see Note 18 to our Audited Financial Statements.
public. We conducted a risk assessment process of the creek, together with leading experts. The assessment was meant to assure that the creek’s hiking trails can be reopened and do not pose risks to hikers' health. The assessment was completed in late 2019 and the results were presented to the authorities. All risk levels were found to be acceptable, and in June 2020, the Ashalim Creek was reopened for hikers. For further information, see Note 18 to our Audited Financial Statements.
Rotem Israel is in a process to remediate its gypsum ponds, based on a remediation plan that was established following the ‘Florida Standard’ and approved in 2020. The remediation work, which commenced in September 2020, was stalled due to discussions with the MoEP regarding the approval of landscape restoration. Discussions are still on going, but Rotem Israel expects to resume remediation process during 2022. In addition, Rotem Israel is designing a remediation action plan for its acidic wastewater ponds.
In 2020, an application for a class action was filed against the Company, according to which, discharge, leakage and seepage of wastewater from Rotem's Zin site, allegedly caused various environmental hazards to the Zin stream, which resulted in damages. For future information, see Note 18 to our Audited Financial Statements.
Part of the environmental challenges Rotem Israel is facing and handling, including certain environmental class actions against the Company, pertaining to environmental damages originating in the period that the Company was owned by the Israeli government, prior to its privatization.
ICL R&D Beer Sheva - A soil survey was conducted. The European Energy Efficiency Directive (EED)initial results of the survey point to small amounts of contamination. ICL will act in accordance with the survey's findings, and related MoEP guidelines.
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Biodiversity
Biodiversity, also called biological diversity, is the European Union’s energy goals by 2020. These goals includevariety of life found in a place on Earth. A common measure of this variety, called species richness, is the reductioncount of GHG emissions by 20% comparedspecies in an area. We recognize the need to consider environmental factors when using land and managing our operations, particularly in ecologically sensitive areas, including areas with unique cultural value. We are committed to ongoing consideration of the levelsimpact of our activities on biodiversity in 1990, an increaseour decision making.
Examples regarding our management of biodiversity at some of our mining sites includes the following:
ICL DSW - Sodom Saltmarsh Lake. The Ashalim reservoir, located south of the ICL’s Dead Sea site, is a wet habitat, situated within a typical arid habitat. It is abundant with rich biological diversity. ICL Dead Sea, whose excavations in the rateregion created this wet habitat, takes extra measures to preserve it and invests in making this unique habitat accessible to the public. In the past, the Sodom salt flats area was a resting stop and habitat for migratory birds. Today, due to changes in the land’s use – to agriculture, residential and industrial purposes, almost no salt flats remain. These flats have unique characteristics with high salinity in the soil and unique species that have adapted to these extreme conditions. The salt flats in Israel are a rare habitat and have been shrinking over time. The Sodom Saltmarsh Lake, initially created as a result of consumptionICL Dead Sea’s excavation activities, has become a salt flat substitute. The lake was created from a rise in groundwater in the excavated area. Over the past few years, the lake has had relatively good water quality year-round. We also started monitoring the lake, using sensors, to continuously measure its water quality. Vegetation was planted in a stable water environment. The lake is now used as a resting spot for migrating birds and as a nesting site for a wide range of renewable energy sources to 20%species.
| • | ICL Boulby - Adjacent to ICL Boubly’s mining facilities, and within its operational area, are non-developed turfs where important habitats and species flourish. Most notable are the woodlands at Mines Wood and Ridge Lane Wood, near Dalehouse. These are some of the most wildlife-rich woodlands in the Northeast England / Yorkshire areas. The woodlands are home to invertebrates, birds and mammals. For over a decade ICL Boulby has worked with the Industry Nature Conservation Association (INCA) to monitor and manage the wildlife that exists in proximity to the mine. Key to this process is a Site Biodiversity Action Plan (Site BAP), operated by ICL Boulby within its operational area. The site BAP is designed to conserve the key habitats and species which live at the site, and is assisted by INCA annually.For further information see: “Item 4 – Information on the Company — D. Property, Plant and Equipment — Mineral Extraction and Mining Operations” and Note 18(c) to our Audited Financial Statements. |
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Hazardous Substances
Some of the total energy consumptionsubstances used at our facilities across the world (such as raw materials, etc.) are considered as hazardous substances. These substances require governmental approvals and registration. Relevant safety measures and procedures for storage and handling are implemented and maintained. Measures are taken to reduce the likelihood and the potential severity of incidents in case of an improvementexposure to hazardous materials. This includes risk assessment, training, personal protective equipment (PPEs) and other relevant mitigation measures for employees and contractors. In addition, suppliers, transporters and vendors are qualified for proper handling of these materials.
Israel
As part of our operations in energy efficiency by 20%. Accordingly, all countriesIsrael, we produce, store, transport and use materials that are membersdefined as hazardous materials according to the Israeli Hazardous Substances Law, 1993. Handling such substances requires a special permit for hazardous material from the MoEP ("Toxins Permit") that is renewed annually. All our Israeli companies have a Toxins Permit, as required by law, and they operate according to the special conditions defined in these permits. Leakage or loss of control of these materials could result in an environmental incident and cause damage to people and/or to the environment. We take measures to prevent such occurrences, and, at the same time, we prepare for such occurrences by means of emergency teams training and appropriate equipment for dealing with these types of events.
Europe
Some of the substances used in our European Unionfacilities (such as raw materials) are considered hazardous substances. Required approvals and registrations for these substances are secured and maintained. Relevant safety measures and procedures for storage and handling are also implemented and maintained. In addition to these measures, we only use qualified suppliers and transport companies, while qualification and training of employees is conducted on a regular basis. All requirements based on the GHS (Globally Harmonized System of Classification, Labelling and Packaging of Chemicals) are acquired and maintained.
Americas
Hazardous substances are utilized at ICL’s facilities in the Americas as raw materials and can also be found as finished products. Where required, registrations for the storage, handling and transportation of these materials are secured and maintained. Measures are taken to increasereduce the efficiencylikelihood of releases of hazardous materials by way of supplier and transporter qualification, as well as training of employees, contractors and vendors on the proper handling of these materials.
China
Hazardous substances are utilized at our facilities in China as raw materials and can also be found as finished products. Where required, registrations for the storage, handling and transportation of these materials are secured and maintained. Measures are taken to reduce the likelihood of releases of hazardous materials by way of supplier and transporter qualification, training of employees, contractors and vendors on the proper handling of these materials.
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Limitation Regulation and Registration of our Products
As a global specialty minerals company, we are subject to multiple rules and regulations in terms of product safety. We ensure that the substances we produce, and sell, are handled in accordance with all such rules and regulations throughout their energy consumptionlife cycle. These rules and regulations, among other things, impose limitations on the use of specific substances and products, require us to register and label some of our products and more. We continuously monitor these rules and regulations and take the necessary operational measures to ensure that we remain in all stagesmaterial compliance with them.
New European Fertilizer Product Regulation
One of the energy chain — conversion, transportationfuture regulatory changes that may impact our products is the new European Fertilizing Product Regulation (FPR, formerly known as NFR), which was published in in 2019, with an effective date of July 2022. FPR covers a broad scope of materials, including all types of fertilizers, liming materials, biostimulants, growing media, soil improvers, inhibitors and final use.other blends of these materials. The new regulation requires fertilizer producers to monitor new contaminating elements in fertilizer products. In addition, pursuant to FPR, fertilizer producers will have to demonstrate the ability to track their products to ensure their quality in the production and supply chain. The labelling of fertilizer products will need to change, and conformity assessment methodologies will need to be updated. Moreover, new tolerance levels for fertilizer contaminants are included in the FPR. One focus area is the level of cadmium in phosphate containing fertilizers. In addition, FPR includes very challenging biodegradation requirements for polymer coatings on controlled release fertilizers. These requirements need to be established by ICL is developing and adopting strategies and procedures atuntil July 2026, for continued sale of controlled release fertilizers. We are actively undertaking steps to adjust to these new regulations for all of its European plants to comply with the local interpretations of the Directive.relevant products.
New Chinese Polysulphate standard
A new industry standard for Polysulphate (as a fertilizer) was recently published in China. We are examining how this new standard may affect the supply of Polysulphate to the Chinese market and the options to meet its requirements.
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Natural Gas
In 2012 the Company signed agreements for supply of natural gas2010, we made a strategic transition to the Group’s manufacturing facilities in Israel with the “Tamar” reservoir. On December 5, 2017, ICL signed an agreement with Energean Israel Ltd. for the supply of up to 13 BCM of natural gas over a period of 15 years, amounting to approximately $1.9 billion. On November 2018, all conditions precedent to the agreement with Energean have been met. The signing of this agreement marked an important milestone for securing a consistent supply of gas to the Company’s facilities in Israel at a competitive price in relation to current gas supply agreements.
The remaining step in this transition is to transition away from the combustion of shale oil at our Rotem Israel site. In 2021, we ceased extracting shale oil minerals and commenced the construction of a new NG-fired turbine installation. We expect this new facility to commence operations in 2022, significantly reducing our emissions of GHG (and other pollutants) at the Rotem Israel site.
For more information regarding natural gas agreements, see Note 18 to our Audited Financial Statements and "Item 3 – Key Information - D. Risk Factors - Our operations could be adversely affected by price increases or shortages with respect to water, energy and our principal raw materials".
The European Energy Efficiency Directive (EED)
In July 2021, the European Commission published a proposal to recast the EU Directive on Energy Efficiency, aimed at further stimulating efforts to promote energy efficiency and achieve energy savings in the fight against climate change. This initiative forms part of the EU’s package of measures aimed at reducing net greenhouse gas emissions by at least 55% by 2030, with an ultimate objective of becoming climate neutral by 2050. Currently, the EED requires an 0.8% per year energy efficiency improvement through the end of 2023, but the proposal seeks to almost double this figure to 1.5% as of 2024 until 2030. The proposal requires each Member State (MS) to determine their own national contribution (based on a formula of objective criteria and benchmarks), which reflects national circumstances. We fully expect that each MS will develop its own response to these proposed changes to the EED, and the Company will develop plans and strategies to comply with these requirements for all our European operations going forward.
Air Quality
Reducing air emissions is a central goal of our environmental strategy. We are taking steps to reduce air emissions by implementing emission prevention solutions and switching to cleaner fuels. Our sites regularly monitor their emissions of pollutants to better manage our operations.
Israel
In Israel, air emissions from major industrial operations are regulated by the Clean Air Law (hereinafter - the Law) which aims to improve air quality, prevent, and reduce air pollution by implementing both prohibitions and obligations, and protect the health and quality of life of human beings and the environment. The Law addresses emission sources (including all our production plants in Israel) and is intended to serve as a platform for implementing the regulatory principles currently in place in the European Union (EU), specifically the principles of the IED (The Industrial Emissions Directive) that was adopted by the EU.
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Our plants in Israel that fall under the definition of Emission Source Subject to Licensing Requirements, have received air emission permits. In the event of deviations from the emission permits’ conditions, we could be subject to administrative enforcement measures, as well as to criminal liability. In addition, certain restrictions on our operations and significant capital investments may be imposed on our Company. In order to comply with the emissions permits granted under the Law, we have made significant investments, and will continue to do so as necessary. As a result, some of ICL’s air emissions have decreased considerably.
| • | DSW and DSM will implement major dust reduction projects over the next few years. Our other production sites in Israel will also increase their efforts to reduce particle emissions. |
In June 2021, Rotem Israel's emission permit was renewed by the Israeli Ministry of Environmental Protection (MoEP), which is valid until September 2023. The renewed permit reflects an updated outline of requirements. Postponement in the execution of a limited number of projects was granted within the framework of an administrative order under Section 45 of the Law.
By the end of 2021, Rotem Israel had completed 77 of 194 specific tasks required by the permit. Rotem Israel is striving to implement the requirements of the permit through a multi-year plan that includes several significant emissions reduction projects. Management still expects difficulties in meeting the execution schedules of a limited number of projects and accordingly continues to work with the MoEP to find a satisfactory solution regarding the timing of the investments, taking into account the impact of uncertainty surrounding Rotem Israel's activity, as far as the implementation of long-term projects is concerned. For more information, see “Item 5 - Operating andNote 18 to our Audited Financial Review and Prospects— A. Operating Results— Principal Factors Affecting our Results of Operations and Financial Condition”.Statements.
Europe
Americas
Air emissions in the Americas are managed through operating permits issued by the relevant agency responsible for each individual site. In the US, air permits are issued under the authority of the US Environmental Protection Agency’s (EPA) Clean Air Act. In Brazil, air emissions are managed under the site’s operation license issued by the relevant state environmental agency.
China
Air emissions in China are regulated in accordance with the Law of the People's Republic of China on the Prevention and Control of Atmospheric Pollution and the Regulations on the Management of Pollutant Discharge Permits.
| • | SBCL – Bromine leakage occurred during January 2022. According to the guidance of local authorities, production onsite was halted. Corrective actions were taken. Production activity is expected to resume by mid – March, following the approval by authorities. |
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Water
We regard potable water as a high-value natural resource. Several of our major production sites are located in water-stressed regions. Water conservation is therefore an inherent part of our business culture. Our production facilities maintain various water conservation projects, including using brackish water and recycling treated wastewater. We track the consumption of water at our facilities worldwide and promote the implementation of water efficiency projects.
We expect potable water to become scarcer in the future across the globe. As water scarcity becomes a pressing issue due to climate change and other factors, we expect greater and stricter regulation of water consumption and wastewater quality. We also anticipate that we will need to invest additional resources to enhance our water efficiency and wastewater quality at several of our plants.
Several of our major production facilities are located in Israel. The country, though located in a water-stressed region, manages its water resources efficiently. Desalination plants and Reverse Osmosis (RO) plants are major contributors to the country’s potable water resources, thereby reducing potable water scarcity in the country. In addition, industrial facilities, such as our facilities in Sodom, are allowed to use non-potable water where possible.
Further information about water related issues in Israel, see Notes 17 and 18 to our Audited Financial Statements.
Wastewater, By-products, Waste & Hazardous Waste
We track and manage our waste streams and take various steps to reduce waste. We identify and seek to maximize potential reuse and recycling of relevant waste streams and are proactive in searching for ‘circular economy’ opportunities. For further information, see the “Circular Economy” section above. During the production processes at ICL’sour facilities, industrial liquid and solid waste and wastewaterwastes are produced. AccordingStorage, transportation, reuse and disposal of waste are generally regulated by governmental authorities in the countries in which we operate. Wastewater quality and quantities must comply with local regulations and with permits at relevant sites. We strive to theimplement zero discharge permit, wastewater is channeled into water sources or evaporation ponds. The variouspolicies where applicable. Various production sites have adapted their treatment systems to the standards applicable to them. We track and manage our waste streams and take various steps to reduce waste or identify and maximize potential reuse and recycling of relevant waste. Most of the waste is either directly treated by us or treated by external certified vendors.
Although we strive to reduce the likelihood of wastewater leakages or solid waste and hazardous materials unexpected releases, we may not always succeed to prevent such incidents, which may occur, among other things, due to various factors that are not within our control. In the event of difficulties in the reuse or disposal of waste generated in our facilities, interruptions or production stoppage may occur and significant costs may be imposed. If we cannot properly mitigate and reduce the exposure, our operations may be adversely and materially affected.
For further information, see “Item 3 - Key Information— D. Risk Factors— As a leading global specialty minerals company the nature of our activities means that we are inherently exposed to hazards relating to materials, processes, production and mining" and “Item 3 - Key Information— D. Risk Factors— Our 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”.
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Israel
Liquid and solid waste and other emissions are regulated by multiple regulations. Our plants in Israel implement waste monitoring and management measures. Each plant is required to inform the authorities on the amount of waste and treatment method for every waste stream under Israel’s PRTR (Pollutant Release and Transfer Register) regulation. Wastewater regulations, including effluent limits, are regulated by the MoEP and partly by local authorities.
Pursuant to the conditions set by the MoEP in their Toxins Permits, our plants in Israel have conducted historical land contamination surveys and submitted them to the MoEP.
ICL Dead Sea (DSW) - Salt by-product is transferred to a large open-air depot, in proximity to DSW’s site. The open-air depot's dimensions (height and area) are limited by statutory requirements. DSW is examining alternatives for salt storage/treatment.
Rotem Israel – At the RotemThe site is implementing a master plan for treating waste is being implementedwastewater treatment, with the principal goal to reduce theof reducing effluent quantities, turning part of theby converting some effluents into products, wastewater recycling, the wastewater, reducing the water consumption, treatmenttreatment/neutralization of wastewater and neutralization and restoration of the wastewater ponds, including theponds. The plan currently includes additional wastewater causedstreams created by the air emmision purificatio processemission purification processes, as required by the Israeli Clean Air Law.
As part of theits treatment of liquid and solid waste, treatment, Rotemthe site is treating thetreats gypsum waste by ponds and storage. In JuneSeptember 2021, the authorities approved a gypsum storage comprehensive plan that would allow the Company to store gypsum for the next 30 years. In addition, the plan allows the use of “Pond 5”, which has been operating since 2018, until the new Pond 5 started to operate.end of its operational life, expected in 2024. The Company started reclamationbegan planning forthe remediation of gypsum pondsPonds 1 through 4to 3 that were used by Rotem Israel in the past. In October 2018,accordance with current regulatory requirements, future expansion of the Court approved a settlement agreement between ATD (Adam Teva V’Din - Israeli Associationstorage piles will need to be positioned on new protective infrastructure. Another requirement is the establishment of restoration methodologies for Environmental Protection)these large storage piles. Rotem Israel is planning to comply with these requirements and is striving to find alternative uses for the Company. Based on the agreement, Rotem will submit a plan for building a future gypsum pond on the west side of road 258. In addition, to the authorities' request, Rotem will submit an alternative location. The final location will be determined based on a full environmental survey, that will be held in the first half of 2019.with external industry partners. For additionalfurther information, see Note 2018 to our Audited Financial Statements.
The CompanyRotem site has conducted several pilots for wastewater recoveryalso completed the implementation of a multi‑year master plan to prevent ground pollution by fuels or oils.
| • | Neot Hovav - Pursuant to the requirements of the MoEP, in the coming years our Neot Hovav site will be required to treat existing hazardous waste (historical). This waste is stored in a designated defined area on the site's premises, in coordination with the MoEP. Some of the currently produced waste is also stored in this area. Treatment of this waste is partly conducted through a combustion facility (Bromine Recovery Unit), which recovers hydro-bromine acid. Additional waste quantities are sent to external designated treatment facilities. Once the area is cleared, the Company will be required to conduct soil surveys. For further information, see Note 17 to our Audited Financial Statements. |
ICL Periclase - The site is working to reduce historic Magnesia waste, stored in a designated waste area, and to reuse it for the plants of WPA, MGA and fertilizers.
ICL Haifa facility, several biological pilots and other pilots were conducted(F&C) – Treated wastewater of the site's facilities flows into the Kishon River, according to find possible solutions for compliancea permit issued by the MoEP. To comply with the standards covering treatment of the facility’s wastewater, flowing into the Kishon River, as directed bysite, in coordination with the Inbar Committee. After careful considerations, the solution that was chosen and approved by the authoritiesMoEP, is to drill to the underground water zone in orderconducting a project to channel the treated wastewater into the underground water. The investment expected to be carried out during 2019.underground. This project is in advanced stages.
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Following laboratory tests that were performed at the site, the MoEP raised a concern regarding local underground water pollution. Therefore, the ICL Haifa site was given two alternatives - Atsealing the Bromine Compounds plantexisting runoff pond, or building a sanitary facility for independent treatmentnew pond. After a thorough examination of the sanitary effluentstwo alternatives, the site decided to build a new pond to reduce the risk to which the plant is operated. exposed.
The treated wastewater is sent as an input feed intoproduction process of phosphoric acid produced in the cooling towers. In addition,1990’s at a facility was constructed for treating industrial wastewater, which includeshas since been shut down, has created a transmission system, physicochemical unit, MBR (Membrane Bio Reactor) unit and evaporation ponds. The system was built according to a US standard, which includes leakage monitoring and air monitoring. In 2013, construction of the evaporation ponds was completed, and all the plant’s wastewater is presently being pumped into these evaporation ponds.
Europe
Liquid and solid waste and emissions are regulated under the European IED – Industrial Emission Directive. The Company implements waste monitoring and other management measures, andmeasures. It is obligated to inform the authorities of the results. Wastewater regulations, including effluent limits, are regulated by states and partly by communities. ICL hasWe are subject to provisions regarding the avoidance of pollution and conditions for assessing compliance with the emission limit values.
Wastewater is partly pretreatedpre-treated and sent to municipalities and third parties for final treatment before discharging. The productiondischarge, or at levels that can be discharged to surface waters without treatment. Production processes, in general, aredo not generatinggenerate significant volumes of direct solid waste. In caseevent that solid waste needs tomust be disposed, of, the required documentation and approvals under thewe strive to perform in accordance with relevant European regulations are fulfilled.requirements.
ICL Iberia - A multi-year program is underway to restore large salt piles, while paying close attention to the issue of wastewater drainage and sludge treatment. In 2015, in accordanceApril 2021, the Company signed an agreement with the provisionsACA, Catalan Water Agency, for the construction and operation of a new collector. The new collector is infrastructure required for the removal of brine water that will be used for restoration, as well as for production. For further information regarding the restoration plan and the agreement for the construction and operation of the Spanish Waste Management regulation, ICL Iberia submitted to the Government of Catalonia a mining site restoration plan for the two production sites Suriacollector in Spain, see Notes 17 and Sallent, which includes a plan for handling the salt piles and dismantling of facilities. The restoration plan for the Suria site is scheduled to run up to 2094, whereas for the Sallent site up to 2070. In June 2018, the new restoration plan was approved. For additional information, see Note 2018 to our Audited Financial Statements.
ICL Iberia has also successfully passed the audit for the certification of UNE 22470 and 22480 standards, which accredited ICL Iberia as a sustainable mining company. ICL Iberia is also engaged in a program regarding non-mining waste management to valorize and reduce its waste, in accordance with local and European waste management.
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Americas
ICL follows a qualification process for waste vendors which assistswho assist us in ensuring that waste is properly profiled, treatment standards are followed, and disposal processes meet regulatory requirements. Wastewater is managed through site industrial discharge permits that are managed through federal, state or local agencies. Waste waterWastewater treatment is mainly focused on chemical treatment. The wastewaterWastewater treatment systems are maintained on a regular basis.
ICL US Gallipolis Ferry - The site operates under a National Pollutant Discharge Elimination System (NPDES) Permit which regulates water discharge from point sources and is renewed every 5 years. The site operates a large Wastewater Treatment Plant (WWTP). Discharge limitations, set by the West Virginia Department of Environmental Protection (WVDEP), are becoming stricter, placing a challenge on the treatment capabilities for some parameters being treated within the current WWTP. Therefore, in 2021 the site installed new technology for its wastewater treatment processes. The site has been very active in pursuing recycling initiatives, which helped achieve a landfill to recycling ratio of 50%. Additionally, the facility entered into a Voluntary Remediation Agreement (VRA) with the former owner of the facility, and the WVDEP. The active remediation has been completed and is being reviewed by the WVDEP for approval. Currently, there is ongoing periodic groundwater sampling, analysis, monitoring, and reporting to the WVDEP, per the VRA.
China
| • | YPH- All wastewater at YPH, after physical or chemical treatment, is reused in the production system with zero discharge. |
LYG - During 2021, ICL ceased operations at its LYG plant following a request by the Chinese authorities to either relocate the plant or cease its operation. As part of the closure process, soil surveys were conducted. Once concluded, ICL is expected to receive compensation due to the closure.
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Ecological Impact
We manage our mineral extraction sites according to local regulations and depend on concessions that are granted to us. Our broad and varied operations cover the entire lifecycle of our products, from the initial production of raw materials through manufacture of the final product. This is becoming more challenging as the population grows in Chinaproximity to our sites. To try to minimize any unexpected disturbances by our facilities to their surrounding communities, we have increased our efforts to take precautions and safety measures in our activities, especially those which involve hazardous materials.
We aim to minimize the ecological impact of both our mining and production activities, beginning at the initial stage of planning, through the implementation of recommendations and finally by monitoring and minimizing their impact. We continuously implement relevant operational methodologies and necessary technologies to prevent unexpected ecological impact. In the event of an ecological impact, we strive to mitigate and remediate the impact, in accordance with best practices and regulatory requirements, including by coordination with the relevant local authorities. For further information, see “Item 3 - Key Information— D. Risk Factors— As a leading global specialty minerals company the nature of our activities means that we are inherently exposed to hazards relating to materials, processes, production and mining".
It should be noted that our Sodom production facility is located in the Jordan Rift Valley, or Syro-African Depression, a ruralseismically active area. For further information, see “Item 3 - Key Information— D. Risk Factors— The Company’slocations of some of our mines and facilities expose us to various natural disasters, including as a result of climate change".
| • | ICL DSW – Due to the negative water balance, the water level in the northern basin of the Dead Sea is decreasing. The receding water levels over the years has required ICL to reposition its pumping station northwards, in order to enable continued operations in the Dead Sea region, which also enables the existence of tourism infrastructure. The P-9 pumping station and feeder canal crossing the Tze’elim stream were constructed in order to maintain operational continuity. The Tze’elim stream alluvial fan is one of the largest and most developed of all the surviving fans in the area, and therefore it is important to preserve it and to protect the biodiversity existing in this habitat. ICL reached an agreement with environmental authorities and organizations, according to which, seven culverts were constructed above the excavated canalto allow flood waters to flow through the original flow channel, without damaging the feeder canal,while maintaining the braided channel fan pattern. In addition, the culverts serve as an ecological corridor, by providing passageways for animals. ICL periodically reviews field data and makes adjustments in accordance with the findings. For further information, see “Item 4 – Information on the company — D. Property, Plant and Equipment — Mineral Extraction and Mining Operations- Dead Sea”. |
| • | ICL Iberia - ICL Iberia’s past activities have resulted in the salinization of some water wells in the Suria and Sallent sites. Compensation to the relevant owners is under discussion. For more information, seenote 17 to our Audited Financial Statements. |
Rotem Israel - In 2017, Rotem experienced an environmental accident in Chinawhich approximately 100,000 cubic meters of acidic phosphogypsum liquid were released into the surrounding environment, as a result of a breach in its Number 3 detainment pond. The liquid entered the nearby Ashalim Creek (Nahal Ashalim), which flows through an area designated as a nature reserve. To the best of our knowledge, as of the reporting date, criminal investigation of the event is still underway. We took intensive actions to restore the creek, to its state prior to the accident, in full cooperation with the relevant authorities.
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Following the incident, the Israel Nature and Parks Authority (INPA) closed the nature reserve to the public. We conducted a risk assessment process of the creek, together with leading experts. The assessment was meant to assure that the creek’s hiking trails can be reopened and do not pose risks to hikers' health. The assessment was completed in late 2019 and the results were presented to the authorities. All risk levels were found to be acceptable, and in June 2020, the Ashalim Creek was reopened for hikers. For further information, see Note 18 to our Audited Financial Statements.
Rotem Israel is in a process to remediate its gypsum ponds, based on a remediation plan that was established following the ‘Florida Standard’ and approved in 2020. The remediation work, which commenced in September 2020, was stalled due to discussions with the MoEP regarding the approval of landscape restoration. Discussions are tested once every six monthsstill on going, but Rotem Israel expects to resume remediation process during 2022. In addition, Rotem Israel is designing a remediation action plan for its acidic wastewater ponds.
In 2020, an application for a class action was filed against the Company, according to which, discharge, leakage and seepage of wastewater from Rotem's Zin site, allegedly caused various environmental hazards to the Zin stream, which resulted in damages. For future information, see Note 18 to our Audited Financial Statements.
Part of the environmental challenges Rotem Israel is facing and handling, including certain environmental class actions against the Company, pertaining to environmental damages originating in the period that the Company was owned by the Center for Environmental Protection regarding gathering of solid waste and hazardous waste. In orderIsraeli government, prior to comply with the local regulations, the Company has adapted its plant by means of installation of systems for removal of wastewater and diversion thereof from clean water sources, including transferring phosphogypsum water (which is created as a by-productprivatization.
ICL R&D Beer Sheva - A soil survey was conducted. The initial results of the production processes) into designated ponds for further treatment. The plant has received a license for unloading contaminating materials and strict environmental licenses and it is in compliance with all the laws and regulations. Furthermore, annual land examinations are conductedsurvey point to small amounts of contamination. ICL will act in accordance with the regulatory requirements.survey's findings, and related MoEP guidelines.
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Biodiversity
Biodiversity, also called biological diversity, is the variety of life found in a place on Earth. A common measure of this variety, called species richness, is the count of species in an area. We recognize the need to consider environmental factors when using land and managing our operations, particularly in ecologically sensitive areas, including areas with unique cultural value. We are committed to ongoing consideration of the Company's plantsimpact of our activities on biodiversity in Israel have conducted historical land surveys, based on a demand received as partour decision making.
Examples regarding our management of biodiversity at some of our mining sites includes the following:
ICL DSW - Sodom Saltmarsh Lake. The Ashalim reservoir, located south of the conditions for receipt ofICL’s Dead Sea site, is a business license regarding an integrated arrangement, submitted them to the Ministry of Environmental Protection and are awaiting the Ministry's instructions.
| • | ICL Boulby - Adjacent to ICL Boubly’s mining facilities, and within its operational area, are non-developed turfs where important habitats and species flourish. Most notable are the woodlands at Mines Wood and Ridge Lane Wood, near Dalehouse. These are some of the most wildlife-rich woodlands in the Northeast England / Yorkshire areas. The woodlands are home to invertebrates, birds and mammals. For over a decade ICL Boulby has worked with the Industry Nature Conservation Association (INCA) to monitor and manage the wildlife that exists in proximity to the mine. Key to this process is a Site Biodiversity Action Plan (Site BAP), operated by ICL Boulby within its operational area. The site BAP is designed to conserve the key habitats and species which live at the site, and is assisted by INCA annually.For further information see: “Item 4 – Information on the Company — D. Property, Plant and Equipment — Mineral Extraction and Mining Operations” and Note 18(c) to our Audited Financial Statements. |
Hazardous Substances
Some of the substances used at our facilities across the world (such as raw materials, etc.) are considered as hazardous substances. These substances require governmental approvals and registration. Relevant safety measures and procedures for storage and handling are implemented and maintained. Measures are taken to reduce the likelihood and the potential severity of incidents in case of an exposure to hazardous materials. This includes risk assessment, training, personal protective equipment (PPEs) and other relevant mitigation measures for employees and contractors. In addition, suppliers, transporters and vendors are qualified for proper handling of these materials.
Israel
As part of ICL’sour operations it produces, stores, transports,in Israel, we produce, store, transport and usesuse materials that are defined as hazardous materials according to the Israeli Hazardous Substances Law, 1993. Handling such substances requires a special permit for hazardous material from the MoEP ("poisons permit"Toxins Permit") that is renewed annually. All ICLour Israeli companies have poisons permitsa Toxins Permit, as required by law, and they operate according to the special conditions defined in these permits. Leakage or loss of control of these materials could causeresult in an environmental incident and cause damage to people and/or to the environment. ICL takesWe take measures to prevent such occurrences, and, at the same time, it prepareswe prepare for such occurrences by means of emergency teams training and appropriate equipment for dealing with these types of events.
Europe
Some of the substances used in ICL’sour European facilities in Europe (such as raw materials, etc.)materials) are considered to be hazardous substances. Required approvals and registrations for these substances are acquiredsecured and maintained. Relevant safety measures and procedures for storage and handling are also implemented and maintained. In addition to these measures, we only use qualified suppliers and transport companies, are used, andwhile qualification and training of employees areis conducted on a regular basis. All requirements based on the GHS (Globally Harmonized System of Classification, Labelling and Packaging of Chemicals) are acquired and maintained.
Americas
Hazardous substances are utilized at ICL’s facilities in the Americas as raw materials and can also be found as finished products. Where required, registrations for the storage, handling and transportation of these materials are acquiredsecured and maintained. Measures are taken to reduce the likelihood of releases of hazardous materials by way of supplier and transporter qualification, as well as training of employees, contractors and vendors on the proper handling of these materials.
China
Hazardous substances are utilized at our facilities in China as raw materials and can also be found as finished products. Where required, registrations for the storage, handling and transportation of these materials are secured and maintained. Measures are taken to reduce the likelihood of releases of hazardous materials by way of supplier and transporter qualification, training of employees, contractors and vendors on the proper handling of these materials.
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Limitation Regulation and Registration of our Products
As a global specialty minerals company, we are subject to multiple rules and regulations in terms of product safety. We ensure that the substances we produce, and sell, are handled in accordance with all such rules and regulations throughout their life cycle. These rules and regulations, among other things, impose limitations on the use of specific substances and products, require us to register and label some of our products and more. We continuously monitor these rules and regulations and take the necessary operational measures to ensure that we remain in material compliance with them.
One of the future regulatory changes that may impact our products is the new European Fertilizing Product Regulation (FPR, formerly known as NFR), which was published in in 2019, with an effective date of July 2022. FPR covers a broad scope of materials, including all types of fertilizers, liming materials, biostimulants, growing media, soil improvers, inhibitors and other blends of these materials. The new regulation requires fertilizer producers to monitor new contaminating elements in fertilizer products. In addition, pursuant to FPR, fertilizer producers will have to demonstrate the ability to track their products to ensure their quality in the production and supply chain. The labelling of fertilizer products will need to change, and conformity assessment methodologies will need to be updated. Moreover, new tolerance levels for fertilizer contaminants are included in the FPR. One focus area is the level of cadmium in phosphate containing fertilizers. In addition, FPR includes very challenging biodegradation requirements for polymer coatings on controlled release fertilizers. These requirements need to be established by ICL until July 2026, for continued sale of controlled release fertilizers. We are actively undertaking steps to adjust to these new regulations for all relevant products.
New Chinese Polysulphate standard
A new industry standard for Polysulphate (as a fertilizer) was recently published in China. We are examining how this new standard may affect the supply of Polysulphate to the Chinese market and the options to meet its requirements.
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Chemicals Regulation and Registration
Europe and UK
The EU has established one of the most comprehensive chemical regulatory frameworks in the world known as REACH, a regulation setting up a framework for registration, evaluation, authorization and restriction of chemicals in the EU. Chemicals imported or manufactured in the UK are regulated by a new UK chemical legislation similar to EU REACH.
All ICL segments are implementing REACH, and are registering their chemicals as required by law. We have submitted applications for registrations of all chemicals relevant to our businesses in the EU (production and sale). As of the date of this Annual Report, a few substances are under evaluation by the authorities (ECHA and the member state). In addition, there are substances listed as Substances of Very High Concern (SVHC), which may result in various regulatory restrictions.
The following are examples of EU limitations on the use of specific chemicals used as flame retardants, biocides and other uses:
The European Ecodesign E-Display regulation, published by the European Commission in December 2019, bans the use of halogenated flame retardants in electronic display enclosures. The regulation has been in force as of March 2021. This is the first-time chemicals have been regulated under this regulation and was justified as a means to improve plastics recycling.
We believe the regulation conflicts with other EU regulatory processes, such as RoHS and REACH, and does not take into consideration current practices of EU plastics recycling. In addition, there are several available technologies for the recycling of plastics with halogenated flame retardants, while alternative flame retardants (not halogenated) present difficulties for plastics recycling. One plant recycling halogenated flame retardants is already in operation (PSLoop). BSEF (the International Bromine Council) has filed a lawsuit against the European Commission, petitioning the EU court to remove the ban. The ruling is expected during 2022.
Tetrabromobisphenol A (TBBPA or TBBA) flame retardant is under review as part of REACH. The results of the review are expected during 2022. TBBA is also being reviewed under the European Directive on the Restriction of the Use of Certain Hazardous Substances in electrical and electronic equipment (RoHS). The draft assessment was published in December 2019 and includes a proposal to restrict TBBA for its additive uses in plastics for EE&E (Electric and Electronic Equipment). BSEF commented on the proposed regulation, expressing concern regarding the scientific basis to justify any restrictions. The European Commission will review and make its final decision, likely in fourth quarter 2022. TBBA is mostly used as a reactive flame retardant and not as an additive.
Additionally, in November 2020, a proposal by Norway to classify TBBA as a carcinogen category 1B was made public and open for a consultation period until the end of January 2021. The proposal was reviewed in September 2021 by the Risk Assessment Committee (RAC) of ECHA, which provided an opinion that the classification is warranted. This change is likely to increase pressure to stop the use of TBBA as an additive flame retardant and increase workplace controls for all European manufacturers. A final decision by the Commission is expected during 2022.
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Ammonium Bromide: Sweden has filed a dossier supporting proposed classification as reproductive toxin category 1B under the Classification, Labelling & Packaging (CLP) EU Regulation. In October 2020, the risk assessment committee (RAC) of ECHA provided an opinion that the classification is warranted. The final Commission decision on the classification is expected by Q2 2022. A decision on the further use of ammonium bromide as a biocide will be taken by the BPC (Biocidal Products Committee), probably during 2022, pending provision of additional data to be requested by Sweden.
Additional specific products of the Industrial Products segment are in the process of evaluation under REACH. For some products, there are draft or final decisions by ECHA to perform additional studies, a process that will take a few years until evaluations are completed. Other products are in the process of evaluation under the Biocides Products Regulation (BPR).
EU Chemicals Strategy for Sustainability
In addition to REACH and the various chemical-specific limitations described above, the European Commission has introduced a new Chemicals Strategy for Sustainability (CSS).
CSS was launched in October 2020 to provide a new long-term strategy for chemicals related policy, in line with the aims of the EU Green Deal. The CSS strives for a toxic-free environment, in which chemicals are manufactured and used in a way that maximizes their societal contribution, but avoids causing harm to the environment or the population, now and in the future. The strategy contains around 80 action points, which may have a significant impact on existing or future legislative frameworks such as CLP (Classification, Packaging and Labelling Regulation) and REACH.
We are carefully monitoring developments related to CSS, in order to be prepared for upcoming regulatory requirements which may affect many of our products.
US
The Toxic Substances Control Act of 1976 (TSCA), which was reformed in 2016, addresses the production, importation, use, and disposal of specific chemicals in the US. The TSCA is administered by the US Environmental Protection Agency (EPA), which regulates the introduction of new and existing chemicals. Under TSCA, certain substances are prioritized by EPA for its risk assessment. EPA publishes projected timelines for prioritized substances and the risk evaluation process. Some ICL products, such as TBBA, are under the TSCA evaluation. We are closely monitoring these publications, which might entail regulatory decisions on restrictions.
The state of New York has passed a bill banning halogenated flame retardants in electronic display casings. The new law impacts display and stands greater than 15 inches. It also places reporting requirements on manufacturers and retailers on the flame retardants they use in these devices. The law is expected to become effective in 2025. We believe the law conflicts with the federal TSCA's Law and the American Chemical Council is evaluating legal action.
Asia
In addition to REACH requirements in the EU, other countries, including South Korea, Turkey and EAEU (Eurasian Economic Union), have adopted, or are in the process of adopting, restrictive regulations similar to REACH, which may affect our ability to manufacture and sell certain products in these countries in the future.
In January 2019, amendments to South Korea's version of REACH (known as K-REACH) came into force. We completed, on time, the notification process under K-REACH, which is a prerequisite for the full registration (pre-registration phase), allowing us to continue selling in South Korea during the transition period, prior to the registration. ICL is working in accordance with the plan established for the registration of its products, which is in line with the deadlines defined by regulation.
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In June 2017, Turkey published its version of REACH, called the KKDIK Regulation. According to the KKDIK Regulation, chemicals, in excess of one ton per year, that are imported and/or manufactured in Turkey, need to be reported by December 31, 2020, followed by subsequent full registrations by December 31, 2023. The Company’s Turkish representative notified the Turkish authorities regarding its relevant substances in a timely manner.
Eurasia REACH requires companies that manufacture or import substances and mixtures into EAEU (Eurasian Economic Union) countries (Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan), in any amounts, to register these substances and mixtures. Although the requirement to notify of any such substances is on a voluntary basis, it is important for us to participate in this process, in order to ensure that our relevant substances will be listed in the EAEU inventory. We are participating in the inventory build-up process, and have submitted relevant substances for inclusion by the Russian authorities.
Israel
Following Israel's acceptance to the OECD in 2010, Israel's MoEP published a draft law to establish a national inventory of industrial chemicals and established processes for risk assessment and management of chemicals in Israel. The MoEP proposed that the law will enter into force on March 1, 2023, but it will give manufacturers and importers until September 1, 2024, to register chemicals. ICL is actively involved, via the Israel Manufacturers Association, in providing inputs regarding the proposed law. Once this new regulation enters into force, it is expected that it will have an impact on ICL, importers and manufacturers in Israel, including higher costs and complex administrative processes.
For more details on regulations and limitations of our products, see “Item 4 - Information on the Company— B. Business Overview—Regulatory and Environmental, Health and Safety Matters — Limitations on the Use of Specific Chemicals Used as Flame Retardants, Biocides and Other Uses".
Business Licenses and other permits
In the ordinary course of our Company’s business activities, we hold business licenses, permits and governmental approvals, including such related to environmental, health and safety, that are issued by various regulatory agencies to operate our facilities. We may be required to obtain or renew such licenses, permits and governmental approvals in the future, in order to continue our current or future operations throughout the world. ICL strives to comply with the terms and conditions set out in its business licenses and permits, as applicable, and in the event of any non-compliance, ICL acts to amend in full coordination with the relevant agencies. We do not believe that any individual plant facility that is subject to a business license or permit is material to our operation as a whole.
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In 2020, our ICL Terneuzen site submitted an application to renew its environmental permit. The application is expected to be addressed by the relevant local authorities in the first quarter of 2022. Our current permit is valid until the new permit is obtained. Local environmental authorities have updated the SVHC list, and for the materials listed there will be a need for adaptations. IPT continues to work together with the Dutch environmental authorities to close any relevant gaps, as identified in a gap analysis conducted in 2021. Please see “Item 3 - Key Information— D. Risk Factors - Our 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.”
Cybersecurity
Our Global IT team handles the operational cybersecurity policies and measures regarding the Group’s global infrastructures, in collaboration with the plants' engineering and control units.
ICL’s cyber security strategy resides on three fundamental pillars: (a) plants and operational security, (b) critical assets & data protection, and (c) fraud prevention. For each pillar, there is a program that seeks to reduce the risks identified. All these programs are periodically reviewed by internal governance structures to assess their effective impact on the Group’s risks. For the purpose of critical plants protection, we continuously cooperate with the National Cyber Directorate - the National CERT, the Ministry of Energy and the Ministry of Environmental Protection in Israel.
As cyberattacks evolve and become more sophisticated, the Group has had to strengthen its prevention and monitorization efforts. As part of such efforts, ICL routinely reviews, reinforces and tests its security processes and procedures through simulation exercises in the areas of physical security and cyber security. The outcome of such exercises is an important part of a feedback process designed to improve the Group’s cybersecurity strategies.
As part of our ongoing efforts to strengthen our cyber defenses, we conducted a comprehensive Cyber Maturity survey in 2019 in cooperation with a leading international consulting firm, which was revalidated in 2020, and will be revalidated again in 2022, alongside intrusion drills and instructional videos designed to raise employee awareness. In addition, the Company retained the services of an SOC cyber center operating 24 hours a day, as well as cyber intelligence services. We also conducted a risk assessment of our sensitive IT systems in cooperation with several leading Israeli and international companies in the field of cyber defense. The Group also tests its continuity plans in order to improve disaster recovery in instances where an incident or vulnerability threatens the continuity of one or several critical processes, services or platforms.
Other lines of action also include the adequate training of ICL's management members in the area of security and incident management. Periodically ICL carries out simulation exercises in order to raise the level of awareness and preparedness of certain key personnel. We maintain cybersecurity and fraud insurance policies. These insurance policies are subject to certain loss limits, deductions and exclusions and we can provide no assurance that all losses related to a cybersecurity or fraud incident will be covered under our policies. For further information, see “Item 3 - Key Information— D. Risk Factors— 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”.
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Water Wells Production Permits
The water supply to DSW is executed via approximately 40 drillings, most of which are located within the concession area. Seven drillings - the Ein Ofarim drillings - are located outside the concession area, and DSW is therefore required to sign, from time to time, lease contracts for limited periods with the Israel Land Authority (ILA).
The contracts renewal process is lengthy and DSW has been working for several years to renew the contracts. As of today, five contacts have been renewed until 2026, two contracts that expired in 2016, are still in the process of being renewed.
In addition, the drillings require a drilling license issued by the Water Authority, and at the beginning of every year the Water Authority issues the Company with a water production license that defines the production capacity of each drilling.
In 2017, the Israeli Water Law was amended, according to which saline water of the kind produced for Dead Sea plants by the Company's own water drilling is charged with water fees. The Company objected to the charges relating to water drilling within the concession area, which constitutes about 65% of the total charge, based on various arguments, most notably the provisions of the Concession Law. In October 2021, the Water Authority informed the Company that water fees will not be charged for water production within the concession area.
In addition, in March 2021, a decision was made by the Water Authority, whereby despite the Company's objection, its definition should be changed to "Consumer-Producer", as defined in the Water Law, starting with the production license for 2021. The main implication of this change is an increase in the water fees of about $3 million per year for water from drillings outside the concession area. The Company filed an appeal with the water court against the said decision and the parties presented their arguments in a preliminary hearing. A hearing procedure is being held, in the framework of which an additional deliberation was scheduled for April 2022.
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C. ORGANIZATIONAL STRUCTURE
A list of our main subsidiaries, including name and country of incorporation or residence is provided in an exhibit to our Form 20-F filed with the U.S. Securities Exchange Commission, which can be found at www.sec.gov.
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D. PROPERTY, PLANT AND EQUIPMENT
The Company operates production facilities in its worldwide locations, including the following:
Israel: under the Israeli Dead Sea Concession Law, 1961, as amended in 1986 (the “Concession Law”), we have lease rights until March 31, 2030, for salt and carnallite ponds, pumping facilities and productions plants at Sodom. We have other production facilities in Israel, situated on land with a long term lease, including the Oron and Zin plants at Mishor Rotem of the Phosphate Solutions segment (the lease agreement for Oron plant has been under an extension process since 2017), production facilities at Naot Hovav of Industrial Products segment (leased until 2024-2048), as well as production, storage and transportation facilities together with chemicals and research laboratories at Kiryat Ata that belong to the Innovative Ag Solutions segment (leased until 2046 2049) |
| Europe: |
Germany: the productionProduction plants of the Phosphate Solutions segment are located at Ludwigshafen, Ladenburg and Hemmingen (Hagesüd).Ladenburg. The production plants of the Industrial Products segment are located at Bitterfeld. All the plants, in addition to Ludwigshafen, are owned by the Company.Company.
The Netherlands: the productionProduction plants of the Industrial Products segment at Terneuzen are owned by the Company. A facility of the Phosphate Solutions segment in Amsterdam is held under a lease until 2034 (or under certain conditions up to 2044)2040 and a production facility in the southern Netherlands is located on land that is partly owned by the Company and partly held under a long‑term lease.
Spain: the concessionsConcessions at the potash and salt mines are held under the concession agreements described below. The potashPotash and salt production plants, and the warehouses as well as theand loading and unloading facilities of the Potash segment at Catalonia are owned by the Company. The Innovative Ag Solutions segment also owns a liquid fertilizer and soluble fertilizer production plant in Totana, owns another plant for mixing solid fertilizers in CartagenaLos Patohos and has a concession in Cartagena port until 2024.
Belgium: The Innovative Ag Solutions segment owns a production facility in Grobbendonk for producing water soluble fertilizers.
Austria: theA dairy protein production plant of the Phosphate Solutions segment at Hartberg (Prolactal) is owned by the Company.Company.
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Brazil: the productionProduction plants of the Phosphate Solutions segment at Sao Jose dos Campos and Cajati are leased by the Company.
Asia:
China – phosphatePhosphate rock mining rights inat the Haikou Mine are derived from mining licenses that are described below. The scrubbing plantplants of YPH are owned by the Company, some of them located on land that is owned by the Company, andwhile others are situated on leased land.
The following table sets forth certain additional information regarding ICL’s principal properties as atof December 31, 2018.2021:
| Property Type | Location | Size (square feet) | Products | Owned/Leased |
| Plant | Mishor Rotem, Israel | 27,094,510 | Phosphate Solutions products | Owned on leased land |
| Plant | Mishor Rotem, Israel | 10,763,910 | Industrial Products products | Owned on leased land |
| Plant | Neot Hovav, Israel | 9,601,591 | Industrial Products products | Owned on leased land |
| Plant | Zin, Israel | 8,484,123 | Phosphate Solutions products | Owned on leased land |
| Plant | Kiryat Ata, Israel | 6,888,903 | Innovative Ag Solutions products | Leased |
| Plant | Oron, Israel | 4,413,348 (not including phosphate reserve) | Phosphate Solutions products | Owned on leased land |
| Plant | Sodom, Israel | 13,099,679 (not including ponds and Magnesium factory) | Potash products | Owned on leased land |
| Plant | 4,088,800 | Magnesium products (Potash segment) | Owned on leased land | |
| Plant | 2,326,060 | Industrial Products products | Owned on leased land | |
| Conveyor belt | 1,970,333 | Transportation facility for Potash | Owned on leased land | |
| Pumping station | 920,314 | Pumping station for Potash segment | Owned on leased land | |
| Plant | 667,362 | Industrial Products products | Owned on leased land | |
| Power plant | 645,856 | Power and steam production for Potash segment | Owned on leased land | |
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| Warehouse and loading facility | Ashdod, Israel | 664,133 | Warehouse for Potash and Phosphate Solutions products | |
| Beer Sheva, Israel | Owned | |||
| and leased | ||||
| Plant | Mishor Rotem, Israel | 430,355 | Phosphate Solutions products | Owned on leased land |
| Warehouse and loading facility | Eilat, Israel | 152,557 | Warehouse for Potash and Phosphate Solutions products | |
| Owned on leased land | ||||
| Headquarters | Tel Aviv, Israel | Company headquarters | Leased | |
| Plant | Catalonia, Spain | 48,491,416 | Mines, manufacturing facilities and warehouses for Potash | Owned |
| Port/warehouse | Catalonia, Spain | 866,407 | Potash and salt products | Owned on leased land |
| Plant | Totana, Spain | 2,210,261 | Innovative Ag Solutions products | Owned |
| Plant | Cartagena, Spain | 209,853 | Innovative Ag Solutions products | Owned |
| Warehouse and loading facility | Cartagena, Spain | 184,342 | Storage for Innovative Ag Solutions products | Leased |
| Plant | ||||
| 692,045 | Industrial Products products | Owned on leased land | ||
| Plant | Lian Yungang, China | 358,793 | Industrial Products products | Owned on leased land |
| Headquarters | Shanghai, China | 8,224 | Company headquarters | Leased |
| Plant | Kunming, Yunnan, China | Phosphate Solutions products | Owned | |
| Plant | Kunming, Yunnan, China | 8,345,037 | Phosphate Solutions products | Leased land |
| Pumping station | Kunming, Yunnan, China | A pumping station for Phosphate Solutions | ||
| Peat Moor | Nutberry and Douglas Water, United Kingdom | 17,760,451 | Peat mine -Innovative Ag Solutions | Owned |
| Plant | Cleveland, United Kingdom | 13,239,609 | Polysulphate products (Potash segment) | Owned |
| Warehouse and loading facility | Cleveland, United Kingdom | 2,357,296 | Polysulphate products (Potash segment) | Owned on leased land |
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| Peat Moor | Creca, United Kingdom | 4,305,564 | Peat mine - Innovative Ag Solutions | |
| Owned | ||||
| Plant | Nutberry, United Kingdom | 322,917 | Innovative Ag Solutions products | Owned |
| Plant | Daventry, United Kingdom | 81,539 | Innovative Ag solutions products | Owned and leased |
| Plant | Terneuzen, the Netherlands | 1,206,527 | Industrial Products products | Owned |
| Plant & warehouse | Lawford Heath, Rugby | 45,000 | Innovative Ag solutions products | Leased |
| Plant | Heerlen, the Netherlands | 481,802 | Innovative Ag solutions products | Owned and leased |
| Plant | Amsterdam, the Netherlands | 349,827 | Phosphate Solutions products and logistics center | Owned on leased land |
| European Headquarters | Amsterdam, the Netherlands | 59,055 | European Company headquarters | Leased |
| Plant | Gallipolis Ferry, West Virginia, United States | 1,742,400 | Industrial Products products | Owned |
| Plant | Lawrence, Kansas, United States | 179,689 | Phosphate Solutions products | Owned |
| Plant | Carondelet, Missouri, United States | 172,361 | Phosphate Solutions products | Owned |
| Plant | North Charleston, South Carolina, United States | 100,000 | Innovative Ag solutions products | Leased |
| Plant | Summerville, South Carolina, United States | 40,000 | Innovative Ag solutions products | Leased |
| US headquarters | St. Louis, Missouri, United States | 45,595 | US Company headquarters | Leased |
| Plant | Ludwigshafen, Germany | Phosphate Solutions products and Infrastructure | ||
| Leased | ||||
| Plant | Ladenburg, Germany | 1,569,764 | Phosphate Solutions products | Owned |
| Plant | Bitterfeld, Germany | 514,031 | Industrial Products products | Owned |
| Plant | Cajati, Brazil | 413,959 | Phosphate Solutions products | Owned |
| Plant | Sao Jose dos Campos, Brazil | Phosphate plant: 137,573 Blending plant: 80,729 | Phosphate Solutions products | Owned on (free of charge) leased land |
| Plant | Brazil Cidade Ocidental | 8,275 | Innovative Ag solutions products | Owned |
| Plant | Brazil Cruz Alta | 7,499 | Innovative Ag solutions products | Owned |
| Plant | Brazil Jacarei I | 879,248 | Innovative Ag solutions products | Owned |
| Plant | Brazil Jacarei II | 967,987 | Innovative Ag solutions products | Leased |
| Plant | Brazil Maua | 968,751 | Innovative Ag solutions products | Owned |
| Plant | Brazil Suzano I | 3,349,186 | Innovative Ag solutions products | Owned |
| Plant | Brazil Suzano II | 637,001 | Innovative Ag solutions products | Owned |
| Plant | Brazil Uberlandia | 263,716 | Innovative Ag solutions products | Owned |
| Plant | Belgium | 128,693 | Innovative Ag solutions products | Owned |
| Plant | Calais, France | 546,290 | Industrial Products products | Owned |
| Plant | Bandırma, Turkey | 375,187 | Phosphate Solutions products | Owned |
| Plant | Hartberg, Austria | 692,937 | Phosphate Solutions products | Owned |
| Plant | Heatherton, Australia | 64,583 | Phosphate Solutions products | Leased |
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Mineral Extraction and Mining Operations
Certain information that follows relating to our mineral extraction and mining operations is derived from, and in some instances is an extract from, the report titled “Technical Report Summary and Resource Estimate” with an effective date of December 31, 2021 (the “Technical Report Summary”) and prepared for us by our qualified person, Wardell Armstrong International Ltd (“Wardell”). Wardell has approved and verified the scientific and technical information in the Technical Report Summary and reproduced in this Annual Report. Portions of the following information are based upon assumptions, qualifications and procedures that are not fully described herein. See “Cautionary Note to Investors Regarding Mineral and Resource Estimates.” Reference should be made to the full text of the Technical Report Summary, which is included as an exhibit to this Annual Report.
Overview
ICL extracts minerals and conducts mining at ICL Boulby (United Kingdom), ICL Iberia (Cabanasses and Vilafruns in Spain), ICL Rotem (including Oron and Zin) and ICL Dead Sea (Israel), and YPH (China).
Figure 1: Location of the ICL Operations
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ICL’s mining activities are dependent on concessions, authorizations and permits granted by the governments of the countries in which the mines are located.
ICL Rotem has been mining phosphates in the Negev in Israel for more than sixty years. The mining is conducted in accordance with phosphate mining concessions, which are granted from time to time by the Minister of Energy under the Mines Ordinance, by the Supervisor of Mines in his Office, as well as the mining authorizations issued by the Israel Lands Authority. The concessions relate to quarries (phosphate rock), whereas the authorizations cover use of land as active mining areas.
ICL Dead Sea (DSW) comprises 37 evaporation ponds producing potash and salt, among other chemical products, located on the south-west shore of the Dead Sea’s southern basin in Israel. DSW is in the production stage and is leased by ICL. Dead Sea Works Ltd., a wholly owned subsidiary, operates the DSW concession covering 652 sqkm, which is in place through 2030.
ICL Iberia holds mining rights for two underground potash mines, Cabanasses and Vilafruns, located in Spain. ICL owns the land on which the Spanish surface facilities are located and the Spanish government owns the underground mining rights. Cabanasses is in the production stage, while Vilafruns was put on care and maintenance in June 2020. ICL Iberia, a wholly owned subsidiary, operates Cabanasses, which comprise 126 licenses for the extraction of rocksalt and potash covering 693 sqkm.
ICL Boulby is an underground polyhalite mine in the production stage located in the United Kingdom, of which ICL owns the freehold of approximately 198 hectares of the mineral field, with the remainder held on a leasehold basis. Cleveland Potash Limited, a wholly owned subsidiary, operates ICL Boulby, which comprises 74 mining leases which cover a total area of 822sqkm, primarily offshore.
YPH is a joint venture between ICL and Yunnan Phosphate Corporation (YPC), controlled by ICL, that owns and operates the open-pit Haikou Phosphate Mine and Processing Facility in the Xishan district of China, of which ICL has a 50% interest. YPH holds two phosphate mining licenses, including the mining license for the Haikou Mine covering 9.6sqkm, which is in the production stage and the Company operates.
In consideration of the concessions, ICL pays royaltiesand taxes to the governments of Israel, China, UK and Spain. Below are the royalties amounts paid in 2018, 2017with respect to 2021, 2020 and 2016: 2019:
| Out of Israel | Total | ||||
| Year Ended December 31, | $ millions | NIS millions | $ millions | ||
| 2018 | 71 | *62 | 133 | 4 | 137 |
| 2017 | 64 | *68 | 132 | 4 | 136 |
| 2016 | 58 | - | 58 | 9 | 67 |
| 2021 | 75 | 242 | 3 | 78 |
| 2020 | 75 | 257 | 3 | 78 |
| 2019* | 82 | 295 | 3 | 85 |
*In
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The evaporation ponds extend over an areaaggregate production data for the properties is summarized in Table 1.
Table 1: Production Data for the Properties
| Production Data for ICL Boulby | |||
| 2021 | 2020 | 2019 | |
| Polyhalite – Hoisted, kt | 784 | 711 | 636 |
| Total Polyhalite Production, kt | 789 | 709 | 632 |
Potash Production at Suria Plant | |||
| 2021 | 2020 | 2019 | |
| Ore hoisted from Cabanasses mine | 2,534 | 1,874 | 1,831 |
| Ore hoisted from Vilafruns mine | - | 484 | 836 |
| Total Processed (Kt) | 2,534 | 2,358 | 2,667 |
| Head Grade, % KCl | 26.4% | 24.2% | 23.8% |
| KCl Produced (Kt) | 599 | 503 | 569 |
| Product Grade, % KCl | 95.5% | 95.5% | 95.5% |
Potash Production at Sallent Plant | |||
| 2021 | 2020 | 2019 | |
| Ore hoisted from Vilafruns mine | 277 | 1,183 | |
| Total Processed (Kt) | - | 277 | 1,183 |
| Head Grade, % KCl | - | 22.4% | 22.5% |
| KCl Produced (Kt) | - | 54 | 234 |
| Product Grade, % KCl | - | 95.5% | 95.5% |
| Total Mine Production of raw ore at Negev (Rotem, Oron and Zin) | |||
| 2021 | 2020 | 2019 | |
| Tons (Mt) | 5 | 6 | 7 |
P2O5 % (Before / After Beneficiation) | 26% / 32% | 26% / 32% | 26% / 32% |
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Product Produced after processing at Negev Operations (Rotem, Oron and Zin) (Kt) | |||
| 2021 | 2020 | 2019 | |
| Phosphate Rock | 2,431 | 3,090 | 2,807 |
| Green Phosphate Rock | 531 | 544 | 567 |
| Fertilizers | 1,082 | 920 | 1,033 |
| White Phosphoric Acid | 168 | 171 | 134 |
| Speciality Fertilizers | 72 | 70 | 66 |
| DSW Production (kt) | |||
| 2021 | 2020 | 2019 | |
| Potash | 3,900 | 3,960 | 3,334 |
| Compacting plant | 1,858 | 1,707 | 1,218 |
| Bromine | 182 | 171 | 181 |
| Cast Mg | 18 | 18 | 22 |
| Total Mine Production of raw ore at YPH | |||
| 2021 | 2020 | 2019 | |
| Millions of tons produced | 2.66 | 2.40 | 2.15 |
Grade (% P2O5 before/after beneficiation) | 21% / 28% | 21% / 29% | 21% / 29% |
Product Produced after processing at YPH (Kt) | |||
| 2021 | 2020 | 2019 | |
| Phosphate Rock * | 2,194 | 2,044 | 1,946 |
| Green Phosphoric Acid | 673 | 632 | 637 |
| Fertilizers | 612 | 584 | 516 |
| White Phosphoric Acid | 83 | 71 | 64 |
| Speciality Fertilizers | 76 | 55 | 46 |
*including Enriched & Grinding Rock
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Table 2: Estimate Mineral Resources as of approximately 150 square kilometersDecember 31, 2021(1)
| Measured Mineral Resources | Indicated Mineral Resources | Measured + Indicated Mineral Resources | Inferred Mineral Resources | |||||
Amount (Mt) | Grades/ qualities | Amount (Mt) | Grades/ qualities | Amount (Mt) | Grades/ qualities | Amount (Mt) | Grades/ qualities | |
Commodity: K2O | ||||||||
| United Kingdom | - | - | 24.0 | 13.7% | 24.0 | 13.7% | 17.3 | 13.5% |
| Boulby | - | - | 24.0 | 13.7% | 24.0 | 13.7% | 17.3 | 13.5% |
| Total | - | - | 24.0 | 13.7% | 24.0 | 13.7% | 17.3 | 13.5% |
| Commodity: KCl | ||||||||
| Spain | 96.5 | 26.4% | 60.8 | 24.7% | 157.3 | 25.7% | 361.2 | 29.1% |
| Cabanasses | 83.9 | 25.7% | 51.4 | 23.3% | 135.3 | 24.8% | 330.5 | 29.1% |
| Vilafruns | 12.6 | 31.0% | 9.4 | 32.1% | 22.0 | 31.5% | 30.7 | 28.9% |
| Israel | 225.0 | 20.0% | 1,500.0 | 20.0% | 1,725.0 | 20.0% | 445.0 | 20.0% |
| Mine/Property DSW | 225.0 | 20.0% | 1,500.0 | 20.0% | 1,725.0 | 20.0% | 445.0 | 20.0% |
| Total | 321.5 | 21.9% | 1,560.8 | 20.2% | 1,882.3 | 20.5% | 806.2 | 24.1% |
Commodity: P2O5 | ||||||||
| Israel | 247.7 | 27.5% | 10.0 | 26.0% | 257.7 | 27.5% | - | - |
| Rotem | 247.7 | 27.5% | 10.0 | 26.0% | 257.7 | 27.5% | - | - |
| China | 3.0 | 22.3% | 2.3 | 24.0% | 5.3 | 23.0% | 0.2 | 20.0% |
| YPH | 3.0 | 22.3% | 2.3 | 24.0% | 5.3 | 23.0% | 0.2 | 20.0% |
| Total | 250.7 | 27.4% | 12.3 | 25.6% | 263.0 | 27.4% | 0.2 | 20.0% |
Mineral Resources are reported in-situ and are divided into two sub‑systems – an arrayexclusive of pondsMineral Reserves. Mineral Resource estimates are not precise calculations, being dependent on the interpretation of limited information on the location, shape and continuity of the occurrence and on the available sampling results. All figures in the above table have been rounded to reflect the relative accuracy of the estimate, and numbers may not sum due to rounding. Mineral Resources are classified in accordance with the guidelines of the Australasian Code for sinking salt (mineral waste fromReporting of Exploration Results, Mineral Resources and Ore Reserves JORC Code (2012) for ICL Boulby, Cabanasses and Vilafruns, and the production process),Pan European Reserves and a seriesResources Reporting Committee (PERC) Standard for Reporting of pondsExploration Results for sinking carnallite (the target mineral constituting a raw material for production of potash).Rotem Israel, DSW and YPH.
ICL Group Limited 129
| Proven Reserves | Probable Reserves | Total Reserves | ||||
| Amount (Mt) | Grades/ qualities | Amount (Mt) | Grades/ qualities | Amount (Mt) | Grades/ qualities | |
Commodity: K2O | ||||||
| United Kingdom | - | - | 8.0 | 13.8% | 8.0 | 13.8% |
| ICL Boulby | - | - | 8.0 | 13.8% | 8.0 | 13.8% |
| Total | - | - | 8.0 | 13.8% | 8.0 | 13.8% |
| Commodity: KCl: | ||||||
| Spain | 29.0 | 25.5% | 61.6 | 26.8% | 90.6 | 26.3% |
| Cabanasses | 29.0 | 25.5% | 61.6 | 26.8% | 90.6 | 26.3% |
| Vilafruns | - | - | - | - | - | - |
| Israel | 172.0 | 20.0% | - | - | 172.0 | 20.0 |
| DSW | 172.0 | 20.0% | - | - | 172.0 | 20.0 |
| Total | 201.0 | 20.8% | 61.6 | 26.8% | 262.6 | 22.2% |
Commodity: P2O5 | ||||||
| Israel | 60.2 | 25.4% | - | - | 60.2 | 25.4% |
| Rotem Israel | 60.2 | 25.4% | - | - | 60.2 | 25.4% |
| China | 57.7 | 21.8% | - | - | 57.7 | 21.8% |
| YPH | 57.7 | 21.8% | - | - | 57.7 | 21.8% |
| Total | 117.9 | 23.6% | - | - | 117.9 | 23.6% |
| (1) | The totals contained in the above table have been rounded to reflect the relative uncertainty of the estimate, and numbers may not sum due to rounding. |
Internal Controls
Quality assurance at Rotem Israel, ICL Boulby, ICL Dead Sea, completedICL Iberia (Cabanasses and Vilafruns), and YPH in China, involve the cut off project that aimeduse of standard practice procedures for sample collection and includes oversight by experienced technical staff during data collection, management, and interpretation. Certain quality control measures for sample analysis include in-stream sample submittal of standard reference material, blank material, and field duplicate sampling. For data verification, staff members observed drill hole locations and orientations, inspected drill cores, and compared to minimizelogs and analytical results, observed core intake, visited outcrops and discussed with on-site geologists, including reviewing working maps and cross-sections. In addition, ongoing reconciliation is conducted between resource estimates and production data. Notwithstanding the seepage fromabove, inherent risks in quality control include potential mislabeling of samples, sample contamination, among others, but the Northern pond. As partCompany maintains a close and diligent monitoring program of all quality control measures for the project sheet piles were inserted up to the depthcollection of 33 meters to the ground along the lengthboth exploration and production data with results deemed suitable for use in subsequent estimation of 18.6 km. The evaporation processes give rise to concentration of the brinesMineral Resources and the sinking of the salt to the floor of the pond. The remaining brines are rich in potash, magnesium and bromide. These brines are pumped into the systems of other ponds, and as a result of the continued evaporation, the "carnallite" precipitates. Carnallite is the raw material used for production of potash, metal magnesium and chlorine. The carnallite is harvested by floating barges and is sent as slurry to our production plants. The brine from the edge of the carnallite ponds is used as a raw material in the production of bromine and magnesium chloride.Mineral Reserves.
ICL Group Limited 130
ICL Boulby
Overview
Middlesbrough.
Figure 2: Location of the ICL Boulby Mine (United Kingdom)
ICL Group Limited 131
ICL Boulby owns the District Board forfreehold of most of the Southern District approved a detailed site plan for mining phosphatemineral field in and around the mine head, extending to approximately 198 hectares. These freehold minerals are in the Zin‑Oron area. This plan,process of being registered at the Land Registry. The remainder of the mineral fields are held on a leasehold basis.
The entities involved in renewing or obtaining new leases are ICL Boulby, local solicitors and individual landowners who own the mineral rights, as described above. The conditions that must be met in order to retain the leases are payment of bi-annual fees to the landowners and a royalty payment for minerals extracted from the property to The Crown Estates.
The mineral leases of ICL Boulby, are based on approximately 74 mineral leases and licenses for extracting various minerals, in addition to numerous easements and rights of way from private owners of land under which covers anICL Boulby operates, and mineral lease rights under the North Sea granted by The Crown Estates. The mineral lease rights with The Crown Estates, include provisions to explore and exploit all targeted and known polyhalite mineral resources of interest to ICL Boulby. Said leases cover a total area of about 350822 square kilometers will(onshore leases total around 32 square kilometers and offshore leases from the Crown Estates cover around 790 square kilometers). All the lease periods, licenses, easements and rights of way are effective, some until 2022 and others until 2038. The Company is acting to renew the rights necessary for the mining operation which expire in 2022, or, alternatively, to seek ownership of these rights.
Regarding ICL Boulby's planning permit for mineral exploitation, which is valid until 2023, in December 2021, the continued miningNorth York Moors Park Authority Planning Committee approved ICL Boulby Mine’s application for the continuation of phosphate locatedpolyhalite and salt production for an additional 25 years, commencing 2023 (until 2048).
Historically, the renewal of leases has not been problematic, and the Company is confident in the Zin valleyrenewal of all land and in the Oron valleymineral leases as required and will receive all government approvals and permits necessary for a period of 25 years or up to exhaustion of the raw material – whichever occurs first, with the possibility for extension (under the authority of the District Planning Board).exploiting all targeted mineral resources.
ICL Boulby has a preferential right to renew some of its leases as it has the Planning Permission to extract minerals. There is no competitive bidding process. The method of miningentities involved in renewing or obtaining new leases are ICL Boulby, local solicitors and individual landowners who own the Negev is by the conventional open pit method, using drilling and blasting, hydraulic excavators and rigid dump trucks or dozers with rippers for overburden removal and front-end loaders and trucks for mining phosphate. Each mine site has varying numbers and thicknesses of over‑burden, inter‑burden and phosphate rock layers, so that the size of the mining equipment is conformed to the mining sites and the operating requirements. In all of the mines, stripping of the waste material and mining of the phosphate are performed by entirely conventional methods.
| Year Ended December 31, | |||
| 2018 | 2017 | 2016 | |
Millions of metric tonnes produced | 8 | 7 | 9 |
Grade (% P2O5 before/after beneficiation) | 26/32 | 26/32 | 26/32 |
| Year Ended December 31, | |||
| 2018 | 2017 | 2016 | |
thousands of metric tonnes | thousands of metric tonnes | thousands of metric tonnes | |
| Phosphate Rock | 3,550 | 3,332 | 3,947 |
| Green Phosphoric Acid | 560 | 575 | 602 |
| Fertilizers | 988 | 957 | 890 |
| White Phosphoric Acid | 162 | 148 | 161 |
| MKP | 70 | 68 | 47 |
The Company ownsbelieves that it will obtain the renewal of all government's leases and operates two processing plants – onelicenses that are necessary for the reserves in Suria and one in Sallent. The processing at these plants includes crushing, grinding, desliming, froth flotation, drying and compacting. In addition, in Suria plant there is a process for crystallization of vacuum salt and pure potash. All the power utilized by our Spanish mining operations is purchased from third‑party electric companies.
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A UK subsidiary which is a part of the potash ore extracted from theInnovative Ag Solutions segment (hereinafter – Everris Limited), has peat mines and processed in the plants in Spain,UK (Creca, Nutberry and Douglas Water). Peat is used as a component to produce professional growing media. All sites are owned by Everris Limited. The current extraction permits are granted by the local authorities and are renewed after examining the renewal applications. The extraction permits for Nutberry and Douglas Water were granted until the three years ended December 31, 2018, 2017end of 2024 and 2016:until 2037 for Creca.
Operations
| Year Ended December 31, | |||
| 2018 | 2017 | 2016 | |
| Sallent | |||
| Ore processed (in millions of metric tonnes) | 2 | 2 | 2 |
| Grade (% KCl) | 23% | 23% | 23% |
| Suria | |||
| Ore processed (in millions of metric tonnes) | 2 | 2 | 2 |
| Grade (% KCl) | 25% | 24% | 26% |
| Total | |||
| Ore processed (in millions of metric tonnes) | 4 | 4 | 4 |
The ICL Boulby mine is accessed by two vertical shafts. One shaft hoists Polysulphate™Polysulphate® and salt and the other provides man-riding and service access. Mining is by continuous mining with shuttle cars and by a modified room and pillar method. The mine has been designated as a “gassy” mine, containing methane gas. Supply of the electricity to the mining operations in the ICL Boulby mine is mainly through electricity purchased on the open market from the localnational electricity company. There is also a power plant on the site that converts gas into electricity and supplements the electricity supply required for execution of the mining operations.during peak demand periods.
The processing plant for Polysulphate™ was established in 2016. This plantPolysulphate® uses simple crushing and screening processes to produce standard and granular products in approximately 50:50 ratio. Research is currently underway regarding methods to further enhance thesethe standard products through compaction, granulation, blending and micronutrient addition which, in combination, is anticipated to deliver high value new fertilizer products into the market. In addition, the former potash processinga compaction plant in the second quarter of 2018 was modified and sections of the drying and compacting circuit were adjusted for the production ofis producing PotashpluS, a compacted blend of Potash Standard (SMOP) and Poly Standard.
| Year Ended December 31, | |||
| 2018* | 2017 | 2016 | |
| Potash Ore (millions of metric tonnes) | 1 | 1 | 2 |
| Grade (% KCl) | 35% | 36% | 36% |
| Grade (% insoluble) | 9% | 11% | 11% |
| Year Ended December 31, | |||
| 2018 | 2017 | 2016 | |
The following table sets forth the amount of our total mine production of raw orepolyhalite at the Company’s mines in the Haikou mine (and the relevant grade)ICL Boulby supplied to our beneficiation plants, for the three years ended December 31, 2018, 20172021, 2020 and 2016:2019:
| 2021 | 2020 | 2019 |
| Polyhalite – Hoisted, kt | 784 | 711 | 636 |
Total Polyhalite Production, kt | 789 | 709 | 632 |
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Property Value
| Year Ended December 31, | |||
| 2018 | 2017 | 2016 | |
| Millions of metric tonnes produced | 2.15 | 1.95 | 2.20 |
Grade (% P2O5 before/after beneficiation) | 20.7/28.98 | 21.3/29.6 | 20.4/29.2 |
| Year Ended December 31, | |||
| 2018 | 2017 | 2016 | |
| thousands of metric tonnes | thousands of metric tonnes | thousands of metric tonnes | |
| Phosphate Rock | 1,725 | 1,545 | 1,798 |
| Green Phosphoric Acid | 635 | 572 | 617 |
| Fertilizers | 621 | 335 | 790 |
| White Phosphoric Acid (TG) | 65 | 61 | 37 |
Mineral Resource Estimate
In ICL Boulby’s mine, the subsidiaries Dead Sea Works, Dead Sea Bromine and Dead Sea Magnesium in Israel (hereinafter – the Subsidiaries). The Opinion was prepared mainlyCompany believe there are sizable resources for the Subsidiaries’ financial statementspurpose of continued production of Polysulphate®, the sale of which in commercial quantities began in 2012. The estimation utilizes assay results from underground exploration drill holes and face sampling with grade control drilling used to aid the geological modelling of the polyhalite seam. The data is considered adequate for 2016use in Mineral Resource estimation; however, classification of Mineral Resources has made consideration for the paucity of quality assurance/quality control (QA/QC) procedures for the existing data set. Work is currently ongoing to modernize sampling methods and onward,implement robust QA/QC procedures. The geological model was used to code and composite the drill hole data based on their stratigraphic position within the seam. Two regional domains were identified: a higher polyhalite grade western region and a lower grade, higher halite eastern region with further sub domains established based on population analysis and grade distribution. The boundary between domains were generally treated as soft boundaries.
Grade estimation was carried out using Ordinary Kriging for the main seam domain (2 – 8 meters above base of seam) in the higher-grade western region, with all other domains estimated using Inverse Distance Weighted (Squared). Estimated grades were validated by visual, statistical, and graphical means on a global and local basis prior to tabulation of the Mineral Resource Estimates. The limited readily available reconciliation data indicates that the resource model performs well overall when compared to plant production data, however, further work is recommended to consistently record and make available grade and tonnage information for all stages of the mining, processing, and shipping of materials.
Mineral Resources were categorized primarily on the search volume used to generate the estimate with additional consideration of drill hole spacing, geological and grade continuity, data density and orientation.
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K2O is an equivalent value calculated from the estimated K based on atomic mass and ratio of K in the compound K2O. The factor used is K2O = K x 1.2046.
Mineral Resources are a 7 meters thick horizon optimized for grade (% K) whilst ensuring mining operations are matched to achievable gradients for excavation.
Mineral Resources are reported using a cut-off grade of 10.7% K, or 12.9% K2O Equivalent, which servereflects the current ability to blend, homogenize and upgrade material as part of mine sequencing and processing.
Polyhalite, Halite and Anhydrite are theoretical values calculated from the elemental analysis under the assumption that all elemental K is contained within Polyhalite
We use long hole drilling to provide information for classification of Indicated Resources, however current spacing is insufficient to identify localised variations in polyhalite grade and seam position that would impact on short-scale production increments and cannot be used as a basis for the reports filed pursuant to the provisions of the Taxation of Natural Resources Law. The Property, Plant and Equipment value provided in the opinion is based on the Replacement Cost methodology and is estimated at about $6 billion, as at December 31, 2015, and at December 31, 2016.a Measured Resource classification.
ICL Boulby – Summary of the Property, Plant and Equipment upon termination of the concession period. Nevertheless, there could be other interpretations to the manner of implementation of the Concession Law’s provisions with respect to the valuation methodology, hence, the estimated value with respect to the Concession Law could materially differ from the value provided in the said opinion, even with respect to the same assets and dates. It is expected that the value of the Property, Plant and Equipment,Polyhalite Mineral Resources at the end of the concession period, will changefiscal year ended December 31, 2021, based on $120 FOB per ton.
| Resources | ||||
Amount (Mt) | Grades/qualities (K2O) | Cut-off grades (K2O) | Metallurgical recovery (K2O) | |
| Measured mineral resources | - | - | 12.9% Equivalent | 100% |
| Indicated mineral resources | 24.0 | 13.7% | ||
| Measured + Indicated mineral resources | 24.0 | 13.7% | ||
| Inferred mineral resources | 17.3 | 13.5% |
| (1) | Mineral Resources are reported exclusive of any Ore Reserve. |
| (2) | All figures are rounded to reflect the relative accuracy of the estimate, and numbers may not sum due to rounding. |
| (3) | Mineral Resources are reported in accordance with the guidelines of the JORC (2012) Codefor Mineral Resources and Ore Reserves. |
As of December 31, 2021, ICL Boulby had 41.3 Mt of mineral resources which is inclusive of the reserves total. We are reporting Mineral Resources at ICL Boulby in accordance with the guidelines of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves JORC Code (2012) the first time in 2021. The mineral resources estimate for ICL Boulby is based on factors related to geological and grade models and the prospects of eventual economic extraction. For further discussion of the material assumptions relied upon, please refer to Section 11.2 of the Technical Report Summary filed as an exhibit to this Annual Report.
The current base case for the life of mine at Boulby, and geological delineation, continues to nominally be 2030. Further work based on the current Mineral Resource of 24.0Mt is expected to expand the life of mine beyond 2030.
Mineral Reserve Estimate
The Probable Mineral Reserve has been derived from Indicated Mineral Resources included within the life of mine plan. The life of mine plan contains in addition to the 10.4Mt Indicated resource, 3.6Mt of Inferred Mineral Resource which is equivalent to 26% of the life of mine. The current scheduling of the Mineral Reserve is contingent on the simultaneous extraction of a portion of these Inferred Resources on an annual basis. Current and future drilling programs are focused on the upgrade of these Inferred Resources.
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ICL Boulby – Summary of Polyhalite (K2O)Mineral Reserves at the end of the fiscal year ended December 31, 2021, based on $120 per ton.
| Amount (Mt) | Grades/qualities (K2O) | Cut-off grades (K2O) | Metallurgical recovery (K2O) |
| Proven mineral reserves | - | - | 12.9% | 100% |
| Probable mineral reserves | 8.0 | 13.8% | ||
| Total mineral reserves | 8.0 | 13.8% |
| (1) | All figures are rounded to reflect the relative accuracy of the estimate, and numbers may not sum due to rounding. |
| (2) | The mineral reserve estimate for the ICL Boulby is classified in accordance with the JORC (2012) Code for Mineral Resources and Ore Reserves. |
As of December 31, 2021, ICL Boulby had 8.0 Mt of polyhalite mineral reserves. We are reporting Polyhalite Mineral Reserves at ICL Boulby for the first time passesin 2021. The mineral reserves estimate for ICL Boulby may be impacted by additional exploration that could alter the geological database and model of mineralization. Material assumptions regarding the technical parameter analysis, forecasted product prices, production costs, permitting decisions, or other factors may positively or negatively affect the reserves estimates. For further discussion of the material assumptions relied upon, please refer Section 12.2 of the Technical Report Summary filed as an exhibit to this Annual Report.
Logistics
The ICL Boulby mine in the United Kingdom is connected by a network of roads running over 11 kilometers southward from the mine entrance, as well as a network of underground roads extending 17.5 kilometers from the mine entrance in the direction of the North Sea. Approximately 80 kilometers of underground tunnels are still open to support present production. The mine has easy access to the national road and train transportation routes. The mine receives good quality drinking water and a stable supply of electricity.
Pursuant to agreements with the North Yorkshire National Parks Authority, the total transport movements by means of the network of roads to and from site to site are limited to a maximum of 150 thousand tons per year and a maximum of 66 trucks per day (no road movements are allowed on Sundays or public holidays). This limitation is not expected to interfere with the future production of ICL Boulby in light of its commitment to maintain the rail link to Teesdock. ICL Boulby's roads and trains are in full compliance with all the requirements.
The rail load‑out products are transported on an ICL Boulby‑owned rail line which extends approximately eight kilometers from the mine entrance to a junction with the national rail network, and from there the products continue to Teesport, Middlesbrough, via the Network Rail Company, the owner and operator of the main rail line.
Eight trains per day transport Polysulphate®,PotashpluS and rock‑saltto the Teesdock. Most of the Polysulphate®output is used as a component of agricultural fertilizers, where volumes are exported by sea from the Teesdock seaport to customers overseas and in the UK.
Rock‑salt is taken by train to Teesdock and transported by ship or trucks to local UK authorities for de‑icing roads.
ICL Boulby leases and operates three principal storage and loading facilities: the Teesdock facility, which is located on the Tees River, and two additional storage facilities that are connected to the main rail line – Cobra and Ayrton Works in Middlesbrough.
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ICL Iberia
Overview
The Company's potash mining operations in Spain are carried out by ICL Iberia (a wholly owned subsidiary of the Company) and the marine transportation performed through Trafico de Mercancias (a wholly owned subsidiary of ICL Iberia). ICL Iberia holds mining rights for two underground potash mines, Cabanasses and Vilafruns. As part of the Company's strategic decision to concentrate its production at the Suria site (Cabanasses mine), in June 2020, ICL Iberia accelerated the process of consolidating its sites and accordingly, the potash production at the Sallent site was discontinued. The Vialfruns mine has been maintained on care and maintenance basis since June 2020. As a result, the Company operates only at the Cabanasses mine, which is located in the town of Suria, approximately 12 kilometers north of the district capital of Manresa in the Cardener river valley. The Cabanasses mine is approximately centered on the geographic coordinates: latitude 41°50’27”N and longitude 01°45’07”E. The Vilafruns mine is approximately centered on the geographic coordinates: latitude 41°50’25”N and longitude 01°52’39”E and UTM (WGS84).
Potash extraction is conducted by mining sylvinite, a mixture of potash and salt found in varying concentrations, the potash is then separated from the salt at production plants located near the mines. The Cabanasses mine is located in the province of Barcelona and is approximately 730 to 1000 meters below ground. The mine has three access points (including the ramp) and the mining is by a modified room and pillar method. The mine site is served by roads/railways and is near major highways.
Figure 3: Location of Cabanasses and Vilafruns Mines (Spain)
ICL Group Limited 137
Potash in Suria was first discovered in 1912 and its commercial development began in 1920. ICL purchased its three Spanish mines in 1998. Potash of late Eocene age occurs in the northeast corner of the Ebro Evaporite Basin which lies along the southern flank of the Pyrenees. Sylvinite and Carnallite are found towards the top of the Cardona Halite at varying depths as a result of purchasedeformations associated with the Pyrenean fold and disposalthrust belt.
Mining Concessions and Lease Agreements
ICL Iberia conducts its mining activities in Spain pursuant to concessions granted to it by the Spanish government. ICL Iberia was granted mining rights based on legislation of assets includedSpain’s Government from 1973 and the regulations accompanying this legislation. Further to the legislation, 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 current and possible future mining activities. Some of the licenses are valid until 2037 and the remainder are effective until 2067. The concession for the "Reserva Catalana", an additional site where mining did not commence, 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.
A total of 126 licenses for the extraction of rocksalt and potash, awarded to Iberpotash, S.A., cover the Cabansses and Vilafruns operations covering an area of 42,489 hectares (425sqkm) in the future valuation.
province of Barcelona and 26,809 hectares (268sqkm) in the province of Lerida. As part of a renewal process, the Company is required to prepare and present a basic technical report describing the intended use of the mines. As required by law, the concessions are required to be renewed prior to their expiration date. If a concession expires, a bidding process will be initiated. ICL Iberia applies in advance for the renewal of mining concessions and until now, had no difficulties in renewing them.
Operations
Extraction of potash from underground mines in Spain is carried out by mining sylvinite (a mixture of potash and salt found in varying potash concentrations). The potash is separated from the salt at the Suria production plant.
The mineral processing includes crushing, grinding, desliming, froth flotation, drying and compacting. In 2018, 2017addition, there is a process for crystallization of vacuum salt and 2016, DSW paid current royaltiespure potash. The power utilized by our Spanish mining operations is purchased from third party electric companies.
According to the Governmentconsolidation plan, the annual production capacity of Israelpotash in Spain is expected to be about 1 million tons by the second half of 2022 and to reach a level of up to about 1.3 million tons in the amountsfuture, following completion of $66 million, $60 million, and $53 million, respectively. In addition,additional necessary adjustments in 2018, the Company paid ansurface production facilities.
ICL Group Limited 138
Production
The following table sets forth the amount of $62our total mine production of potash at the Suria plant in ICL Iberia, for the three years ended December 31, 2021, 2020 and 2019:
| Potash Production at Suria Plant | |||
| 2021 | 2020 | 2019 | |
| Ore hoisted from Cabanasses mine | 2,534 | 1,874 | 1,831 |
| Ore hoisted from Vilafruns mine | - | 484 | 836 |
| Total Processed (Kt) | 2,534 | 2,358 | 2,667 |
| Head Grade, % KCI | 26.4% | 24.2% | 23.8% |
| KCI Produced (Kt) | 599 | 503 | 569 |
| Product Grade, % KCI | 95.5% | 95.5% | 95.5% |
| (1) | Potash at Vilafruns was extracted until the end of the second quarter of 2020. |
Property Values
As of December 31, 2021, the overall book value of the property, plant and equipment of Cabanasses amounted to about $688 million.
ICL Group Limited 139
The following table sets forth the amount of our total mine production of potash at the Sallent plant in respectICL Iberia, for the three years ended December 31, 2021, 2020 and 2019:
| Potash Production at Sallent Plant | |||
| 2021 | 2020 | 2019 | |
| Ore hoisted from Vilafruns mine | - | 277 | 1,183 |
Total Processed (Kt) | - | 277 | 1,183 |
| Head Grade, % KCI | - | 22.4% | 22.5% |
| KCI Produced (Kt) | - | 54 | 234 |
| Product Grade, % KCI | - | 95.5% | 95.5% |
| (1) | Potash at Vilafruns was extracted until the end of the second quarter of 2020. |
Property Values
As of royalties relatingDecember 31, 2021, the overall book value of the property, plant and equipment of Vilafruns amounted to prior periods.about $4.2 million.
Mineral Resource Estimate
The Mineral Resources Estimate of the Cabanasses and Vilafruns deposits have been classified in accordance with the guidelines of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, The JORC Code” edition 2012. The life-of-mine at Cabanasses is based on current drilling approximately 19 years.
Mineral Resource classification was set in the block model by ICL Iberia, using wireframe perimeters to outline the extent of mineralisation. The Mineral Resource classification methodology considers the confidence in the drillhole data, the geological interpretation, geological continuity, data spacing and orientation, spatial grade continuity and confidence in the Mineral Resource estimation process. Areas identified as being below a cut-off grade of 10% KCl and areas of low seam thicknesses are also considered by ICL Iberia as non-recoverable
The Mineral Resource estimate is used to classify Measured Mineral Resources based on a drill spacing of 50m and Indicated Mineral Resources based on a drill spacing of 100m. The remaining peripheral areas, located within the mineralized zone, are considered suitable for classification of Inferred Mineral Resources.
In calculating the cut-off grade and reserves, an average of the previous three years’ market prices and operating costs is used as part of the calculations to ensure economic feasibility. The three year average market price used to calculate our reserves for potash per ton of product in Spain is $291 FOB per ton as of December 31, 2021.
In addition, ICL Dead Sea payscalculating the Israel Land Authority lease rentals in respectreserves, an average of the leasesprevious three years’ currency conversion rates is used as defined in the concession certificate. The amountpart of the payment andcalculations to ensure economic feasibility. The three-year average currency conversation rate used to calculate the related update mechanismreserves is provided in the agreement signed with the Israel Land Authority (formerly the Israel Land Administration) in 1975. The amount is updated from time to time.€0.85 per dollar as of December 31, 2021.
Cabanasses – Summary of Potash Resources at the end of the fiscal year ended December 31, 2021, based on $291 FOB per ton.
| Resources | ||||
Amount (Mt) | Grades/qualities (KCl) | Cut-off grades (KCl) | Metallurgical recovery (KCl) | |
| Measured mineral resources | 83.9 | 25.7% | 10% | 85.5% |
| Indicated mineral resources | 51.4 | 23.3% | ||
| Measured + Indicated mineral resources | 135.3 | 24.8% | ||
| Inferred mineral resources | 330.5 | 29.1% |
| (1) | Mineral Resources are reported exclusive of any Ore Reserve. |
| (2) | All figures are rounded to reflect the relative accuracy of the estimate, and numbers may not sum due to rounding. |
| (3) | Mineral Resources for Cabanasses have been estimated in accordance with the guidelines of the JORC Code (2012). |
As of December 31, 2021, Cabanasses had 465.8 Mt of potash mineral resources. We are reporting Mineral Resources at Cabanasses in accordance with the guidelines of JORC for the first time in 2021. The mineral resources estimate for Cabanasses is based on factors related to geological and grade models and the prospects of eventual economic extraction. For further discussion of the material assumptions relied upon, please refer to Section 11.3 of the Technical Report Summary filed as an exhibit to this Annual Report.
Vilafruns – Summary of Potash Resources at the end of the fiscal year ended December 31, 2021, based on $291 FOB per ton.
| Resources | ||||
Amount (Mt) | Grades/qualities (KCl) | Cut-off grades (KCl) | Metallurgical recovery (KCl) | |
| Measured mineral resources | 12.6 | 31.0% | 10% | 85.5% |
| Indicated mineral resources | 9.4 | 32.1% | ||
| Measured + Indicated mineral resources | 22.0 | 31.5% | ||
| Inferred mineral resources | 30.7 | 28.9% |
| (1) | Mineral Resources are reported exclusive of any Ore Reserve. |
| (2) | All figures are rounded to reflect the relative accuracy of the estimate, and numbers may not sum due to rounding. |
| (3) | Mineral Resources for Vilafruns have been estimated in accordance with the guidelines of the JORC Code (2012). |
As of December 31, 2021, Vilafruns had 52.7 Mt of potash mineral resources. We are reporting Mineral Resources at Vilafruns in accordance with the guidelines of JORC for the first time in 2021. The mineral resources estimates for Vilafruns is based on factors related to geological and grade models and the prospects of eventual economic extraction. For further discussion of the material assumptions relied upon, please refer to Section 11.3 of the Technical Report Summary filed as an exhibit to this Annual Report.
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Mineral Reserve Estimate
The parameters used in determining the cut-off grade considered the geology (continuity, structure), mining method, mining dilution, plant utilization, technical feasibility, operating costs and historical and current product prices. The calculation involves a computerized geological block model using both, the drilling data from the underground drilling campaign and from the exploratory surface drilling, with underground drilling work carried out on a regular basis, around 60,000 meters drilled in 2020; while the surface drilling was done in different times in the last decades. The KCI grade is interpolated using inverse distance method (ID2). Zones that are potentially mineable are defined, considered the thickness, the grade, and the structure of the ore seams; a minimum factor grade (%KCl) multiplied by the thickness (meters) of 80 is considered to define these mineable blocks. Modifying factors are based on historic data for “Dilution”, “mining recovery” and “cut-off grade” of 19% KCl etc. are applied. All this data is provided to the Mine Planning Dept. to spatially define the mine planning of access tunnels to all mineable blocks and then mining fleet activity scheduling to plan the life-of-mine.
The cut‑off grade calculations are made by the economists of ICL Iberia's finance department. The calculation considers the long-run forecast of selling prices, costs and expected ore production Long-Range-Plan. A conservative approach in the selling prices was chosen.
The proven and probable reserves above the cut-off grade were obtained considering the mining method, mining recovery, mining dilution, selective mining, geological conditions and in plant recovery, based on ICL Iberia’s historical data. The mining recovery and dilution factors, which are required in the conversion of resources to reserves consider the mining method and the geological conditions in the mine; and consist of historical yield data based on 20 years of operations at the mines. The mining recovery ranges from approximately 25% to 60% by ICL Iberia’s “room and pillar” modified layout. The reserve quantity (in tons) and grade are quoted as those that are expected to be delivered to the treatment plant and are subject to metallurgical recovery factors. Metallurgical recovery factors consist of historical yield data and are based on the previous ten years. A processing plant recovery of 86.5% (similar to the recovery achieved in the Súria treatment plant, in the last 5 years) was chosen. The proven reserves have been determined by information from the underground drillings, using distances of 80 to 150 meter intervals between sample points, while probable reserves have been explored by surface vertical boreholes at sample intervals of up to 1,300 meters. The final product is well over 95.5% KCl to avoid quality losses.
The Suria processing plant has a current capacity to produce approximately 800 thousand tons per annum of potash, but it is expected to reach a capacity of 1 million tons by the second quarter of 2022.
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Cabanasses – Summary of Potash Reserves at the end of the fiscal year ended December 31, 2021, based on $291 FOB per ton.
Amount (Mt) | Grades/qualities (KCl) | Cut-off grades (KCl) | Metallurgical recovery (KCl) |
| Proven mineral reserves | 29.0 | 25.5% | 19% | 85.5% |
| Probable mineral reserves | 61.6 | 26.8% | ||
| Total mineral reserves | 90.6 | 26.3% |
| (1) | All figures are rounded to reflect the relative accuracy of the estimate, and numbers may not sum due to rounding. |
| (2) | Mineral Reserves for Cabansses are classified in accordance with the guidelines of the JORC Code (2012). |
As of December 31, 2021, Cabanasses had 90.6Mt at 26.3% KCl of potash Ore reserves compared to 88.0Mt at 27.0% KCl as of December 31, 2020, an increase of 0.4%. This increase was due to a decrease in cut-off grade (19% KCl in 2021 compared to 20% KCl in 2020) and was partially offset by production.
There are no Mineral Reserves for Vilafruns as of December 31, 2021.
Logistics
ICL Iberia transports by conveyor belt the excavated ore from the Cabanasses mine to the production plant. The final products potash and salt are transported from the plant to its customers by trucks and trains to the local market, and via railway to Barcelona port to the overseas markets.
A designated railway line is used for the transport of potash from the mines to the Barcelona port. Most of ICL Iberia's shipments are made via a terminal it owns at the port of Barcelona (Trafico de Mercancias – Tramer). ICL Iberia owns and maintains approximately 1.5 kilometers of standard gauge railway at Suria plant that connect to the regional rail network. Until now, up to three trains leave on a daily basis with a total payload capacity of 800 tons, spread out over about 21 freight cars. During 2019, ICL Iberia signed, a new freight rail transport agreement with FGC (Ferrocarrils Generalitat de Catalunya), which is expected to increase the capacity of the rail transport. In 2022, it is expected to increase to 24 freight cars, 1,000 tons and up to seven daily trains. The rail route for potash transport from Suria to the terminal in the port of Barcelona includes a rail route of about 80 kilometers. The production site (Suria) has one rail load out system for the rail to port transport systems. The train traction engine and part of the bulk freight car rolling stock is operated by the owner and operator FGC (Ferrocarrils de la Generalitat de Catalunya).
ICL Iberia owns and operates its own port facilities, which consist of bulk potash and salt storage facilities, comprised of freight car and rail truck conveyor unloading facilities and product storage warehouses.
As part of the plan for increasing ICL Iberia's production capacity, an upgrade is being made to the logistical infrastructure at the Suria Site and in the Cabanasses mine (entrance ramp into the mine, commissioned in 2021), the factories and the Company's berth in the Barcelona port, in such a manner that will permit production, transport and export of about 2.3 million tons of potash and salt per year.
The new facilities at the port of Barcelona are managed by ICL Iberia’s subsidiary Tramer and comprise an area of 866,407 square feet divided into three zones.
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Rotem Amfert Israel (ICL Rotem)
Overview
Rotem Amfert Negev Limited (“ICL Rotem/Rotem Israel”), a limited liability company and wholly owned subsidiary of ICL, retains three phosphate open pit mines (Rotem, Oron, and Zin) in the Negev desert region of southern Israel, each with its own beneficiation plant. Commencing 2021, ICL Rotem operates only two of its phosphate open pit mines (Rotem and Oron), in light of the discontinuation of the mining activity at Zin in 2020. While the mining activity at Zin was discontinued, the mine restoration at the site continues. The Rotem operation is located approximately 17 kilometers to the south of the town of Arad and east of the town of Dimona (Figure 4), at approximately latitude 31°04’00”N and longitude 35°11’50”E. The Oron and Zin operations lie to the southeast of the town of Yeruham. Oron is approximately centered on the geographic coordinates: latitude 30°54’00”N and longitude 35°00’59”E. Zin operation is approximately centered on the geographic coordinates: latitude 30°50’35”N and longitude 35°05’22”E. The head office of ICL Rotem is in the town of Be’er Sheva. These sites are accessible by road and rail.
Figure 4: Location of the Rotem, Oron, Zin, and DSW Properties (Israel)
Israel has a well-established and high-quality road network making travel and access within the country, and to the ICL properties, straightforward and efficient. Rotem is 150 kilometers by road from Ashdod, a Mediterranean port, via Route 258 and Highways 25 and 40. The Zin mine is located at the end of the current rail network in the Negev desert. It is linked via an internal private haul road to the Oron mine which is 10 kilometers from Zin. All three ICL Rotem production areas are connected by rail to the port of Ashdod on the Mediterranean and by road to Eilat on the Red Sea. Exports are mainly handled via Ashdod, where ICL has its own dedicated facilities, though exports to the Far East, Australia and India can be handled via Eilat.
Mining Concessions and Lease Agreements
Rotem Israel has been mining phosphates in the Negev in Israel for more than sixty years. The mining is conducted in accordance with the phosphate mining concessions, which are granted from time to time by the Minister of National Infrastructures, Energy and Water under the Mines Ordinance, by the Supervisor of Mines in his Office, as well as the mining authorizations issued by the Israel Lands Authority. The concessions relate to quarries (phosphate rock), whereas the authorizations cover use of land as active mining areas.
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Rotem Israel had two mining concessions: (1) Rotem Field (including the Hatrurim Field) and (2) Zafir Field (Oron Zin) which were valid until the end of 2021.
The Zafir joint concession included the Oron concession, which was first granted in 1952. The1952, and the Zin concession, which was first granted in 1970, as part of the Oron concession and the joint concession was subsequently renamed Zafir.concession. The Zafir concession (consisting of both the Oron and Zin sites) was renewed every 3 years, and in 1995 it was granted for 10 years and thereafter, in 2002, it was granted up to 2021. The Rotem concession was first granted in 1970 and, similar to the Zafir concession, it was granted in 1995 for 10 years and inyears. In 2002 it was granted up to 2021. In 2011, the Supervisor of Mines expanded the area of the Rotem concessionconcession's area, by joining the Hatrurim site to the area of this concession, and theconcession. The matter was transferred to the Israel Lands Authority for handling ofin order to treat the expansion of the permissible mining area to the Rotem field, in accordance with expansion of the concession area.
In December 2021, the Ministry of Energy granted Rotem Israel an extension to the quarry (phosphate rock) whereas the other authorizations relate to use of land as active mine sites.
Rotem Israel has two lease agreements in effect until 2024 and 2041 and an additional lease agreement of the end of 2021;
Mining Royalties
As part of the terms of the concessions in respect of mining of the phosphate, Rotem Israel is required to pay the State of Israel royalties based on a calculation as stipulated in the Israeli Mines Ordinance.
In January 2016, a legislative amendment entered into effect covering implementationaccordance with the Mines Ordinance, the royalty rate for production of the recommendations of the Sheshinski Committee that changed the formula for the calculation of the royalties, by increasing the rates from 2% tophosphates is 5% of the value of the quarried material and leftmaterial.
Under the Supervisor the possibility of collecting royalties at a higher rate if he decided to grant a mining right in a competitive process wherein oneterms of the selection indicesconcessions and in order to continue to hold the concession rights, Rotem Israel is the royalty rate.
Planning and Building
The mining and quarrying activities require a zoning approval of the site based on a plan in accordance with the Israeli Planning and Building Law, 1965. These plans are updated, as needed, from time to time. As atof the reporting date, of this report, there are various requests at different stages of deliberations pending before the planning authorities.
In November 2016, the District Board for the Southern District approved a detailed site plan for mining phosphatephosphates in the Zin‑Zin Oron area. This plan, which covers an area of about 350 square kilometers, will permit the continued mining of phosphate located in the Zin valley and in the Oron valley for a period of 25 years or up tountil the exhaustion of the raw material – whichever occurs first, with the possibility for extension (under the authority of the District Planning Board).
For further information regarding Rotem Israel's royalties, tax, planning and building proceedings, leases and other matters, and for description of Health filed an appeal of the said approval, requiring compliance with the Ministry of Health’s recommendationcertain risks relating 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, FinanceRotem Israel's concession, see Note 18 to our Audited Financial Statements 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.“Item 3 - Key Information— D. Risk Factors”, respectively.
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ICL currently operates large surface phosphate mining sites at Oron and Rotem, which are located at the southern part of Israel in the Negev region. The mining activity at Zin was discontinued in mid-2020, while the mine restoration at the site continues.
Each of the said fields in Israel has a petition was submittedsimilar layered structure and geological composition, with the phosphate preserved as relatively thin layers along the margins and within the axes of two northeast to southwest trending asymmetrical synclines (basins or trough shaped folds). Oron and Rotem lie within a single syncline located northwest of the Zin syncline. The three deposits have been proved over extensive distances in terms of length (Rotem 10 kilometers, Oron 16 kilometers and Zin 22 kilometers) and width (4 kilometers each). The Campanian (Upper Cretaceous period) phosphate rock deposits of Israel are part of the Mediterranean phosphate belt extending from Turkey, through Jordan and Israel, and westward through Egypt, Tunisia and Morocco. The Company began operations at Oron in the 1950s and at Rotem and Zin in the 1970s. These sites are accessible by road and rail. See “Item 4 - Information on the Company— D. Property, Plant and Equipment— Concessions and Mining Rights”.
The method of mining in the Negev is by the conventional open pit method, using drilling and blasting, hydraulic excavators and rigid dump trucks or dozers with rippers for overburden removal and front-end loaders and trucks for mining phosphate. Each mine site has varying numbers and thicknesses of over burden, inter burden and phosphate rock layers, so that the size of the mining equipment is conformed to the Israeli Supreme Courtmining sites and the operating requirements. In all the mines, stripping of Justicethe waste material and mining of the phosphate are performed by entirely conventional methods. The Company is committed to continuing the restoration work, as it has been so far, in all its mines.
Phosphate rock from the Rotem mine is transported by truck to a nearby beneficiation plant at Mishor Rotem. In addition, on this site, ICL operate two sulphuric acid plants, three green phosphoric acid plants, a white phosphoric acid plant, three superphosphate plants, two granular fertilizer plants, MKP plant and an oil shale burning plant for production of electricity and steam. ICL also has beneficiation plant at Oron. The product of the process is a high grade, multi purpose phosphate product, and from 2021, most of the production is used to produce phosphoric acid and fertilizers.
The plant at Mishor Rotem is powered primarily from electricity generated by the municipalityCompany at its sulphuric acid plants and oil shale that the Company mines at Mishor Rotem. In order to ensure the continuity of Arad againstenergy production in Rotem Israel, and in accordance with the National Planning and Building Council,policy of the Ministry of Health,Energy and the Ministry of Environmental Protection, and Rotem,the Company is working to revokeaccelerate 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 advancementcompletion of a detailed plan for phosphate miningproject to replace existing energy production infrastructure at Rotem, which utilizes oil shale, with a natural gas-based steam boiler, so it will be completed before the existing mined reserves of oil shale are utilized. All the power utilized by the Oron beneficiation plant is purchased from the national grid 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.Israel.
ICL Innovative Ag Solutions segment (hereinafter – Everris UK), has peat mines in the UK (Creca, Nutberry and Douglas Water). Peat is used as a raw material for production of detached beds for soil improvement and use as soil substitutes in growing media. The Nutberry and Douglas Water mining sites are owned by Everris UK, while the Creca mine is held under a long‑term lease. The mining permits are granted by the local authorities and are renewed after examination of the local authorities. The mining permits were granted up to the end of 2024.Group Limited 146
The following table sets forth information regarding our estimatesthe amount of our total mine production of raw ore at the Company’s mines in the Negev (and the relevant grade) supplied to our beneficiation plants, for the three years ended December 31, 2021, 2020 and 2019:
| Year Ended December 31, | |||
| 2021 | 2020 | 2019 | |
Millions of tons produced | 5 | 6 | 7 |
Grade (% P2O5 before/after beneficiation) | 26% / 32% | 26% / 32% | 26% / 32% |
The following table sets forth the approximate amounts of product produced after processing by our operations in the Negev Desert, for the three years ended December 31, 2021, 2020 and 2019:
| Year Ended December 31, | |||
| 2021 | 2020 | 2019 | |
| thousands of tons | thousands of tons | thousands of tons | |
| Phosphate Rock | 2,431 | 3,090 | 2,807 |
| Green Phosphoric Acid | 531 | 544 | 567 |
| Fertilizers | 1,082 | 920 | 1,033 |
| White Phosphoric Acid | 168 | 171 | 134 |
| Specialty Fertilizers | 72 | 70 | 66 |
Property Values
As of December 31, 2021, the overall book value of the property, plant and equipment of ICL Rotem, amounted to about $746 million.
Mineral Resource Estimate
The reported P2O5 grade is intended for the phosphate rock product, after physical beneficiation (usually dis-aggregation, sieving and sizing), designed to replicate actual plant performance. The reported grade and tonnages, organic matter and chlorine contents are designated for the in-situ material.
At Rotem and Zin, future resources are located in the deeper, more steeply dipping, or remote parts of the deposits. They have higher average stripping ratios and ore haulage distances than do those at the older, smaller, and more compact mining operation at Oron. In general, production is progressively toward deeper pits.
The three-year average FOB Ashdod market prices used to calculate our resources and reserves in Israelthe Negev as of December 31, 2018:2021 are as follows: $686 per ton P2O5 for green phosphoric acid, $1,374 per ton for WPA, $1,283 per ton for MKP, and $153 per ton for GSSP.
In estimating the Resources and Reserves, an average of the previous three years’ currency exchange rates is used to ensure economic feasibility. The three-year average currency conversation rates used to calculate our resources and reserves in the Negev as of December 31, 2021 are as follows NIS 3.41 per $1.00, $1.15 per €1.00 and $1.31 per £1.00.
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Rotem, Zin, and Oron – Summary of Phosphate Mineral Resources at the end of the fiscal year ended December 31, 2021, based on FOB Ashdod market prices: $686 per ton P2O5 for green phosphoric acid, $1,374 per ton for WPA, $1,283 per ton for MKP, and $153 per ton for GSSP.
| Category | White Phosphate | Low Organic Phosphate | High Organic & Bituminous Phosphate | ||||||
Average Grade ( | Cut-off Grades (P2O5) | Metallurgical Recovery (P2O5) | |||||||
(millions of tons) | |||||||||
| Rotem | Measured | 156.7 | 27.5% | 25% | 54% | ||
| Indicated | 10.0 | 26.0% | |||||
| M + Ind | 166.7 | 27.5% | |||||
| Inferred | - | - | |||||
| Zin | Measured | 3.0 | 18.0 | 27.5% | 23% | 56% | |
| Indicated | - | - | - | ||||
| M + Ind | 3.0 | 18.0 | 27.5% | ||||
| Inferred | - | . | - | ||||
| Oron | Measured | 70.0 | 27.5% | 20% | 59% | ||
| Indicated | - | - | |||||
| M + Ind | 70.0 | 27.5% | |||||
| Inferred | - | - | |||||
| Total | Measured | 3.0 | 244.7 | 27.5% | |||
| Indicated | - | 10.0 | 26.0% | ||||
| M + Ind | 3.0 | 254.7 | 27.5% | ||||
| Inferred | - | - | - |
| (1) | Mineral Resources are reported exclusive of any Ore Reserve. |
| (2) | All figures are rounded to reflect the relative accuracy of the estimate, and numbers may not sum due to rounding. |
| (3) | Mineral Resources for Rotem, Zin, and Oron are classified in accordance with the Pan European Reserves and Resources Reporting Committee (PERC) Standard for Reporting of Exploration Results. |
| Rotem | Proven | - | 10 | - | - | 10 | 26% |
| Zin | Proven | - | 16 | 15 | 3 | 34 | 25% |
| Oron | Proven | 14 | 4 | - | - | 18 | 23% |
| Total (Proven) (1) | 14 | 30 | 15 | 3 | 62 |
As of December 31, 2021, ICL Rotem had 257.7 Mt of phosphate resources. We are reporting Mineral Resources at ICL Rotem in accordance with the guidelines of PERC for the first time in 2021. The mineral resources estimate for ICL Rotem is based on factors related to geological and grade models and the prospects of eventual economic extraction. For further discussion of the material assumptions relied upon, please refer to Section 11.4 of the Technical Report Summary filed as an exhibit to this Annual Report.
Mineral Reserve Estimate
In determining these reserves,Reserves, a cut‑off grade of 20% to 25% P2O5 was applied, depending on the processing characteristics of the phosphate rock and the existing processes.mineral processing method. The cut‑off grade differs for each mine in accordance with the beneficiation process and enrichment capacity: a cut‑off grade of 20% P2O5 and lower was applied at Oron, aafter it has been proven that the required quality can be reached. A cut‑off grade of 23% P2O5 was applied at Zin, and a cut‑off grade of 25% P2O5 was applied at Rotem. The cut‑off grade for Oron is lower because ICL Rotem has the appropriate beneficiation process for phosphate rock with limestone, which characterizes the white phosphate and, therefore, the beneficiation process, through the flotation process, is extremely efficient. The cut‑off grade for the Rotem mine is higher because the beneficiation process there has a limited grinding and flotation system, and only medium to high grade phosphate can be fed (which is appropriate for the existing reservesReserves at Rotem). The cut‑off grade for Zin is slightly higher than that of Oron because of the presence of marl and clay that reduces the efficiency of the enrichment process.
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For purposes of determining the cut‑off grade, utilization and quantities parameters account was taken of the geology factors (continuity, structure), mining method, mining dilution, plant utilization, technical feasibility, operating costs, and historical and current product prices. The parameters employed in the calculation are as follows: on‑site tonnestons (multiplying area by layer thickness and phosphate density); recoverable tonnes (tonnestons (tons of mineral which can be mined, taking into account mining dilution); mineable tonnestons (recoverable tonnestons from which the tonnestons produced are deducted); stripping ratio (the quantity of waste removed per tonneton of phosphate rock mined); planned dilution; cost per tonneton for mining (typically related to transport distance to beneficiation plant); cost per tonneton including reclamation; and unplanned dilution (5%(7%-15% unplanned dilution is taken into account based on the data from the mining inoperation and the data from the problematic areas). ICL Rotem’sRotem Israel’s yearly mining plan is not determined by the minimum cut‑off grade, and fluctuations in commodity prices rarely affect its cut‑off grade.
The cut‑off grade calculations come from historical yield data and ICL Rotem’s historical experience with mining, and are adequately calculated and modelled by its geologists, operation engineers and economists. The calculation takes the ore grade in‑situ, converts it into extracted ore with ICL Rotem mining method, and estimates the plant yield depending on the grade. Economic modelling then gives the cut‑off figures currently used by ICL Rotem.
The proven reserves above the cut‑off grade were obtained from the calculated on‑site resources taking into accountconsidering the mining method, the rate of mining dilution, and in‑plant recovery, based on ICL Rotem’s historical data. In order to convert the resources into reserves, account is taken, separately, of the mining dilution rate, mining method and the geological conditions, including historical yield data, and are based on the previous five years’ experience.operational data. The mining dilution rate in the Company's mines in Israel’s southern region is 2.5% and takes into account the continuity of the layers and the geological structure. The quantity and grade of the calculated reserves are those that are expected to be transferred to the processing plant and are subject to recovery indices in the utilization plant. The updated utilization in the plant varies between the sites as it consists of historical yield data, which is currently 45% for Oron, 46% for Rotem, and 40-46% for Zin. Zin. These differences in metallurgical recovery rates are due to rock properties and differences in the beneficiation process at the different mines. Proven reserves have been explored by borehole intersections typically at 5070 to 70150 meters intervals. Each of the three plants at the mines has been developed over the past few decades for the optimum upgrading of the phosphate rock to concentrate ore containing typically 31% to 32% P2O5. The conversion ratio for most of the phosphate layers is 1.8 tonnestons for every 1 cubic meter, where a conversion ratio of 2.0 tonnestons per cubic meter is used for hard, calcareous beds. These factors are used on the basis of long experience and are considered to be reasonable.
The Company continues to check the adaptation of various potential types of phosphate rock for the production of phosphoric acid and its downstream products as part of an effort to utilize and increase existing phosphate reserves. In 2021, the Company will further analyze additional types of phosphate including: R&D, pilots, plant testing activities and other economic feasibility assessments.
In calculating the cut‑off grade and reserves, an average of the previous three years’ market prices and operating costs wasare used as part of the calculations to ensure economic feasibility.
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| • | Rotem mine: The life of the mine at Rotem is approximately 4 years based on reserves of nominally 8.6 million tons of low organic/low magnesium phosphate (given the current annual mining volume). The low‑organic, low-magnesium phosphates are suitable for phosphoric acid production. The annual average production (mining) rate for the low-organic/low-magnesium phosphate at Rotem is 2 million tons per year. |
| • | Oron mine: The life of the mine at Oron is approximately 3 years based on a reserve of 8.5 million tons and an average production of 2.8 million tons per year of white phosphate (given the current annual mining volume). |
| • | Zin mine: In order to actively address global market volatility, the continuing trend of economic and business uncertainty and to mitigate the implications of the COVID-19 spread and its impact on the Segment's results, several efficiency initiatives and measures have been initiated, which include, among other things, the discontinuation of the production and sale of the phosphate rock activity at Zin plant in 2020. |
Currently, we are generating sufficient rock production from other mines and as such, we are not providing a life of mine estimate for Zin. Nevertheless, Zin reserve can be used as part of the future raw materials for MGA production at ICL Rotem and for other downstream products.
Rotem, Zin, and Oron – Summary of Phosphate Mineral Reserves at the end of the fiscal year ended December 31, 2018 are as follows: $6512021, based on FOB Ashdod market prices: $686 per tonneton P2O5 for green phosphoric acid, $1,286$1,374 per tonneton for WPA, $1,186$1,283 per tonneton for MKP, $290 per tonne for GTSP,and $153 per tonneton for GSSP, and $79 per tonne for phosphate rock.
| Category | White Phosphate | Low Organic Phosphate | ||||||
Total (Mt) | Average Grade ( | Cut-off Grades (P2O5) | Metallurgical Recovery (P2O5) | |||||
(millions of tons) | ||||||||
| Block 1 | Proven | 3 | 21% |
| Block 2 | Proven | 5 | 21% |
| Block 3 | Proven | 30 | 22% |
| Block 4 | Proven | 17 | 22% |
| Total (Proven) | 55 |
| Rotem | Proven | 8.6 | 10.0 | 18.6 | 26.7% | 25.0% | 54% | |
| Probable | - | - | - | - | ||||
| Zin | Proven | 12.4 | 17.7 | 30.1 | 25.5% | 23.0% | 56% | |
| Probable | - | - | - | - | ||||
| Oron | Proven | 8.5 | 3.0 | 11.5 | 23.1% | 20.0% | 59% | |
| Probable | - | - | ||||||
| Total | Proven | 8.5 | 24.0 | 27.7 | 60.2 | 25.4% | ||
| Probable | - | - | - | - | - | - |
| (1) | All figures are rounded to reflect the relative accuracy of the estimate, and numbers may not sum due to rounding. |
| (2) | Mineral Resources for Rotem, Zin, and Oron are classified in accordance with the Pan European Reserves and Resources Reporting Committee (PERC) Standard for Reporting of Exploration Results. |
As of December 31, 2021, ICL Rotem had 60.2 Mt of phosphate reserves a cut-off grade of 15% P2O5 was applied in accordance with the flotation abilitycompared to produce usable concentrate rock (28.5% P2O5) which is the average quality required for the production of phosphoric acid in the Yunnan region. In practice, the Haikou mine is able to process and use all the phosphate that exists in the deposit. The phosphate layers’ borders are physically well defined, also has very low P2O5 content (usually around 5%), and the mining process does not leave any unmined phosphate behind.
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Logistics
Most of ICL’s products, whether in solid or liquid state, are transported in bulk from Rotem Oron and ZinOron by road and rail to either the Ashdod port or by road to the Eilat port. From Eilat, ICL’s products are transported by ship to markets in the Far East, and from Ashdod, they are transported by ship to Europe and South America.
Within the Rotem site, there is a rail loading facility that typically loads up to 30 wagons for each delivery. Approximately 1.81.4 million tonnestons of products per year are transported by rail from the Rotem site to Ashdod. About 150Ashdod port, about 230 thousand tonnes of productstons by road to Ashdod and about 80 thousand tons are transported by road from Rotem to the port of Eilat.
ICL Tovala is responsible for transporting phosphate rock from the Oron and Zin processing facilities in road‑road going rigid trucks and trailers. Each trailer has a payload of 40 tonnes. Approximately 100 thousand tonnes are transported from Zin to Rotem for further processing, andtons. In 2021, about 1.11.3 million tonnes aretons of phosphate rock were transported from the Oron mine by truck for additional processing.processing and about 70 thousand tons of phosphate rock were transported from Zin, which ceased operations in 2020 and the transfer of the remaining inventory ended in early 2021, to Rotem for further processing.
From Ashdod port, approximately 650 thousand tonnestons of sulphur are transported to Rotem each year. Sulphur arrives at the port of Ashdod from overseas, where it is loaded into road‑going trucks and transported to the Company’s sulphur dispatch 5 kilometers away. At the depot, it is loaded into rail cars and then transported to Rotem.
The port of Ashdod is located on the Mediterranean coast, approximately 40 kilometers south of Tel Aviv and approximately 120 kilometers northwest of the Rotem site and the Tzefa site.
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Dead Sea Works
Overview
Figure 4: Location of the DSW, Rotem, Oron and Zin Properties (Israel)
ICL Dead Sea (DSW) is located on the south- west shore of the Dead Sea’s southern basin (Figure 4). It is one of the world’s largest producer and supplier of potash products, in addition to a range of chemical products. The main product produced at the plant is muriate of potash (MOP) for use as agricultural fertilizer. The DSW comprises 37 ‘ponds’ covering an area of 146.7sqkm and its associated processing facilities. The DSW processing facilities are approximately centered on the geographic coordinates: latitude 31°02’18”N and longitude 35°22’15”E. Water from the northern Dead Sea basin is pumped into evaporation ponds which cause the salt (carnallite) to precipitate out of solution and to sink and deposit on the bottom of the ponds. A dredge harvests the carnallite and pumps this solution to the processing facilities located at the southern end of the site.
The DSW are located alongside Highway 90 which runs broadly north – south from the port of Eliat in the south, northwards alongside the Dead Sea and onwards through Tiberias on the Sea of Galilee in the north of the country. Products from the DSW are transferred to either the port of Ashdod (Mediterranean) or port of Eilat (Red Sea). For Ashdod, an 18 kilometers conveyor transfers potash product from the DSW to a terminal at Tsafa and then onwards by train or road truck. For transport to Eilat, road trucks are used for the entire journey.
Mining Concessions and Lease Agreements
Pursuant to the Israeli Dead Sea Concession Law, 1961 (hereinafter – the Concession Law), as amended in 1986, and the concession deed attached as an addendum to the Concession Law, DSW was granted a concession to utilize the resources of the Dead Sea and to lease the land required for its plants in Sodom for a period ending on March 31, 2030, accompanied by a priority right to receive the concession after its expiration, should the Government decide to offer a new concession.
The concession covers a total area of 652 sqkm, including the evaporation ponds that cover an area of 146.7 sqkm.
In accordance with section 24 (a) of the Supplement to the Concession Law, it is stated, among other things, that at the end of the concession period all the tangible assets at the concession area will be transferred to the government, in exchange for their amortized replacement value – the value of the assets as if they are purchased as new at the end of the concession period, less their technical depreciation based on their maintenance condition and the unique characteristics of the Dead Sea area. Pursuant to section 24 (b) of the Supplement to the Concession Law, it is stated that capital investments made 10 years before the concession ends (i.e., April 2020) to the end of the concession period require a prior consent of the Government, unless they can be fully deducted for tax purposes before the end of the concession period. However, the Government's consent to any fundamental investment that may be necessary for the proper operation of the plant, will not be unreasonably delayed or suspended. In 2020, a work procedure was signed between the Company and the Israeli Government for the purpose of implementing section 24(b).
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The procedure determines, among other things, the manner of examining new investments and the consent process. In addition, the procedure determines the Company's commitment to invest in fixed assets, including for preservation and infrastructure, and for ongoing maintenance of the facilities in the concession area (for the period beginning in 2026) and the Company's commitment to continue production of potassium chloride and elemental bromine (for the period commencing 2028), all subject to the conditions specified in the procedure. Such commitments do not change the way the Company currently operates.
In consideration of the concession, DSW pays royalties and lease rentals to the Government of Israel and is subject to the Law for Taxation of Profits from Natural Resources, on top of the regular income tax.
For further information regarding ICL Dead Sea royalties, tax and other matters, see Notes 15 and 18 to our Audited Financial Statements and “Item 3 - Key Information— D. Risk Factors— Our minerals extraction operations are dependent on concessions, licenses and permits granted to us by the respective governments in the countries wherein they are located”.
Operations
The concentration of the minerals extracted from the Dead Sea (including potash and bromide), constituting the raw materials for production, is on the rise due to the hydrological deficit experienced by the Dead Sea over the past 40 years.
ICL’s extraction of minerals from the Dead Sea begins with an evaporation process facilitated by the hot and dry desert climate of the Dead Sea region, which is the lowest point on the earth’s surface. Due to the hydrological deficit, the sea is declining at the rate of over 1 meter per year and is now about 436 meters below sea level. As a result, the Dead Sea is divided into two parts: the natural Northern Basin and the Southern Basin, on the basis of which dams were installed and artificial evaporation ponds were constructed.
The production process begins with the pumping of brine from the Northern Basin into the evaporation ponds in the Southern Basin (a distance of about 12 kilometers) via the Company’s pumping stations. In 2021, ICL pumped approximately 443 million cubic meters of water from the Northern Basin into the evaporation ponds, of which, approximately 282 million cubic meters of brine were rechanneled at the end of the process to the Northern Basin. In 2021, the Company produced from the Dead Sea approximately 3.9 million tons of potash, 187 thousand tons of bromine, 18.2 thousand tons of metal magnesium, 111 thousand tons of salt and 131 thousand tons of solid magnesium chloride.
Due to the constant decline in water level (annual average of 1.1 meters which has been recorded in recent years), we are required to relocate the P-88 pumping station, after 21 years of service drawing water from the Northern Basin. During 2021, all the pumping units were assembled, the works on raising the settling basin to allow for extensive ground settlement was completed and the new P-9 pumping station started operating in early 2022.
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Nevertheless, the Company expects no impact on its operations due to the current sea water level, which will allow the continued operation of our existing P-88 pumping station until the second half of 2022.
The evaporation ponds extend over an area of approximately 150 square kilometers and are divided into two sub systems – an array of ponds for precipitating salt (mineral waste from the production process), and a series of ponds for precipitating carnallite (the target mineral constituting a raw material for production of potash).
The salt pond known as Pond 5 is the largest pond in the series of ponds, having an area of approximately 80 square kilometers. Pond 5 was built during the 1960s by construction of a large dam, where in the center of the dyke surrounding it a partition (separation clay core) was installed for sealing and prevention of potential leakage of solutions. This dam demarks the Southern Basin of the Dead Sea on the Israeli side and allowed the continued existence of the Southern Basin due to the system of pumping stations and flowing channels that are operated as part of the industrial operational system of the evaporation ponds. In order to continue and operate Pond 5, the dyke was raised several times during the last 50 years. In 2013, DSW completed the cut off project that aimed to minimize the seepage from the northern pond. As part of the project, sheet piles were inserted up to the depth of 33 meters to the ground along the length of 18.6 kilometers. The evaporation processes give rise to concentration of the brines and the sinking of the salt to the floor of the pond. The remaining brines are rich in potash, magnesium and bromide. These brines are pumped into the systems of other ponds, and as a result of the continued evaporation, the "carnallite" precipitates. Carnallite is the raw material used for production of potash, metal magnesium and chlorine. The carnallite is harvested by floating barges and is sent, as slurry, to our production plants. The brine from the end of the carnallite ponds is used as a raw material in the production of bromine and magnesium chloride.
The rise of the water level of Pond 5 -
The minerals from the Dead Sea are extracted by way of solar evaporation, whereby salt precipitates onto the bed of Pond 5, located in one of the sites of DSW. The precipitated salt creates a layer on Pond 5 bed with a volume of approximately 16 million cubic meters per year. The production process of the raw material requires that a fixed brine volume is preserved in Pond 5. Failure to maintain a constant volume of brine in Pond 5 could result in a reduction in production capacity. To this end, up to the end of 2021, the raising of the brines' level of Pond 5 was according to the rate at which the pond floor rises, while performing the salt harvest. Since the solutions' level maximum height (15.1 meters) was reached at the end of 2021, from 2022 onwards, the solutions' volume in Pond 5 will be preserved by way of harvesting the salt ("the Permanent Solution" and/or "the Salt Harvesting Project" as described below).
Raising the water level of Pond 5 above a certain level may cause structural damage to the foundations of hotel buildings situated close to the water’s edge, to the settlement of Neve Zohar and to other infrastructure located along the western shoreline of the Pond. Until the end of 2020, in order to ensure that Pond 5 water level does not exceed the maximum height (15.1 meters), the Government of Israel, through the Dead Sea Preservation Government Company Ltd., implemented a project for construction of coastline defenses, together with DSW (which financed 39.5% of the project's cost), as part of which the dike along the western beachfront of Pond 5, across from the hotels, was raised, together with a system for lowering subterranean water. The construction work with respect to the hotels' coastlines was completed and currently the Dead Sea Preservation Government Company Ltd. is carrying out elevation work in the intermediate area between the two hotel complexes.
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The "Permanent Solution", which should provide a defense at least until the end of the current concession period in 2030, was established in the agreement with the Government of Israel signed in 2012. The purpose of the agreement was, among others, to provide a permanent solution for raising the water level in Pond 5 and stabilizing the water therein at a fixed level by harvesting salt from this pond and transferring it to the Northern Basin of the Dead Sea. According to the agreement, the planning and execution of the Permanent Solution will be through the Salt Harvesting Project which will be performed by DSW. In addition, the agreement stipulates that from January 1, 2017, the water level in the pond will not rise above 15.1 meters. Nevertheless, in the event of a material deviation from the project's timetables, without the Company having violated its obligations, the Company will be permitted to request raising of the water level above 15.1 meters.
The Company bears 80% and the State of Israel bears 20% of the cost of the Salt Harvesting Project. However, the State's share will not exceed NIS 1.4 billion.
A salt dredger, which is part of the implementation of the Salt Harvesting Project, commenced operations in the fourth quarter of 2020. In 2021, the dredger has been operated successfully, dredging according to plan 6 million cubic meters of salt, which allowed DSW to set the level at its maximum height at the end of 2021. The P-9 pumping station operation commenced in early 2022.
For further information, see Note 18 to our Audited Financial Statements and “Item 3 - Key Information— D. Risk Factors— The accumulation of salt at the bottom of the salt Pond 5, the central evaporation pond in our solar evaporation pond system used to extract minerals from the Dead Sea, requires the water level of the pond to be constantly raised in order to maintain the production capacity of extracted minerals”.
The receding level of the Dead Sea - not to be confused with the rising water level in Pond 5 discussed above. These two seemingly contradictory phenomena are occurring simultaneously, as Pond 5 is located in the Southern Basin on a different plane than the main body of the sea lying to its north, necessitating a special pumping station to constantly feed the pond with water. While the brine level of Pond 5 is rising due to the accumulation of salt on its floor and the continuous pumping of brine from the Northern Basin of the Dead Sea, the water level of the Northern Basin is receding, due to the reduction of the flow from the Jordan river to the Northern basin and due to the water pumping the ICL and Arab Potash Company (APC) are using for their production processes. As a result of the decline of the Dead Sea level, sinkholes appear and their appearance in the Dead Sea area has increased over the years. Most sinkholes develop in the northern Basin of the Sea, where the pumping station and the feeding canal of DSW are located. In order to protect these operational infrastructures, DSW monitors the area and fills sinkholes when they appear.
Additional effect of the decline of the Dead Sea level is the erosion of Arava stream, which flows along the international border between Israel and Jordan. This erosion could endanger the stability of the eastern dykes in the future in the array of salt and carnallite ponds. 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 carrying on ongoing monitoring and acting on site in order to protect the dykes. As part of these efforts, research was conducted, designed to gather information for the detailed planning of a project to prevent the continued erosion of the stream. The research phase was completed in 2020 and the detailed design is expected to commence in early 2022. 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.
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For further information, see “Item 3 - Key Information— D. Risk Factors— 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”.
Since 2018, the Company has also been operating a new cogeneration power station in Sodom, Israel. The new power station supplies electricity and steam required to support the production of ICL's plants at the Sodom site and sells its surplus electricity to other ICL companies and external customers via the national grid in Israel. The new power station has a capacity of about 330 tons of steam per hour and about 230 MWh. The Company is operating the new power station concurrently with the former power station, which will continue to operate on a limited basis as "hot back‑up". Due to its full natural gas operation, high efficiency and advanced pollution reduction technologies, the new plant also allows for significant reductions in direct air emissions including greenhouse gas emissions.
Production
The following table sets forth the amount of our total mine production at the Company’s mines in DSW supplied to our beneficiation plants, for the three years ended December 31, 2021, 2020 and 2019:
Production (Kt) | |||
| 2021 | 2020 | 2019 | |
| Potash | 3,900 | 3,960 | 3,334 |
| Compacting plant | 1,858 | 1,707 | 1,218 |
| Bromine | 182 | 171 | 181 |
| Cast Mg | 18 | 18 | 22 |
Property Value
As of December 31, 2021, the overall book value of the property, plant and equipment of ICL Dead Sea, as presented in its financial statements (which are based on replacement cost accounting), amounted to about $6 billion. For further information, see Note 15E to our Audited Financial Statements.
Mineral Resource Estimate
The DSW is not a typical mining operation with a finite Mineral Resource, explored by drilling, that is estimated and classified. It is also not a typical solution mining operation that would require an assessment of porosity and fluid flow. However, even though the source of brine is renewed to a certain extent by inflow to the northern Dead Sea basin, the resource cannot be considered either fully renewable or infinite, given that there are certain engineering, licensing and environmental constraints. The Mineral Resource estimate is therefore based on the following steps:
| 1. | Determination of pumping rate of brines from northern Dead Sea area to lagoons. |
| 2. | Determination of expected recovery of product as based upon: |
| a. | Ability to determine composition and consistency of supply |
| b. | Ability to predict consistency of evaporation and mineral precipitation |
| c. | Ability to predict consistency of split into various products |
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| 3. | Determination of Mineral Resource classification is based upon: |
| a. | Any variation in supply composition |
| b. | Any variation in return flow of brines to the northern Dead Sea basin to assess efficiency and consistency of process |
| c. | Variation in precipitation of mineral amounts |
| d. | Accuracy of sonar measurements in determining reconciliation |
| 4. | Consideration of the length of extraction license held by ICL |
| 5. | Assessment of potential changes to any of the above factors during the remaining length of license. |
Mineral Resources must have reasonable expectations of eventual economic extraction. Therefore, in assessing Mineral Resources for DSW we also consider the length of the license allowing abstraction of waters from the northern Dead Sea basin to DSW.
It is also important to consider future outside impact on what is a dynamic system. The primary factor that could impact on the source brines is the continuing drop in the sea level of the northern Dead Sea area and its potential effect on the chemistry of the Dead Sea waters. Water deficit, as a result of reduced inflow, has the result of changing chemistry of the remaining brine. The concentration of KCl has increased over time (at a rate of +0.05% over 20 years) and the concentration of NaCl has decreased because of halite deposition in the northern Dead Sea basin. This reduction in water level with associated changes in water chemistry are predicted to continue. The increased KCl content of the Dead Sea brine is predicted to cause an increase of DSW's potash production at a rate of an additional 11.5kt per year from 2020, with an increased potash production of approximately an additional 230kt over current rates by 2040.
DSW - Summary of Potash Mineral Resources at the end of the fiscal year ended December 31, 2021, based on $255 FOB per ton.
| Classification | Product | Amount (Mt) | Grades/qualities (KCl) | Cut-off Grades (KCl) | Metallurgical Recovery (KCl) |
| Measured | KCl | 225 | 20% | n/a | 100% |
| Indicated | KCl | 1,500 | 20% | ||
| Inferred | KCl | 445 | 20% | ||
| Total | KCl | 2,170 | 20% |
| (1) | Potential brine volume is based upon the estimated pumping rate from Northern Dead Sea multiplied by potential extraction period until the year 2133. |
| (2) | Mineral Resources are reported exclusive of any Ore Reserve. |
| (3) | All figures are rounded to reflect the relative accuracy of the estimate, and numbers may not sum due to rounding. |
| (4) | Mineral Resources for the DSW are classified in accordance with the Pan European Reserves and Resources Reporting Committee (PERC) Standard for Reporting of Exploration Results. |
As of December 31, 2021, DSW had 2,170 Mt of potash resources. We are reporting Mineral Resources at DSW in accordance with the guidelines of PERC for the first time in 2021. The mineral resources estimate for DSW is based on factors related to predictive models following assumed water inflow to the Dead Sea as well as the prospects of eventual economic extraction. For further discussion of the material assumptions relied upon, please refer to Section 11.5 of the Technical Report Summary filed as an exhibit to this Annual Report.
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Mineral Reserve Estimate
The Mineral Reserves Estimate of the Dead Sea deposits have been classified in accordance with the definitions presented in Pan European Reserves and Resources Reporting Committee (PERC) Standard for Reporting of Exploration Results.
DSW – Summary of Potash Reserves at the end of the fiscal year ended December 31, 2021, based on $255 FOB per ton.
Amount (Mt) | Grades/qualities (KCl) | Cut-off grades (KCl) | Metallurgical recovery (KCl) |
| Proven mineral reserves | 172 | 20% | n/a | 100% |
| Probable mineral reserves | - | - | ||
| Total mineral reserves | 172 | 20% |
| (1) | All figures are rounded to reflect the relative accuracy of the estimate, and numbers may not sum due to rounding. |
| (2) | Mineral Reserves for the DSW are classified in accordance with the guidelines of the PERC Code (2021). |
As of December 31, 2021, DSW had 172 Mt of potash reserves. We are reporting Potash Mineral Reserves at DSW for the first time in 2021. The mineral reserves estimate for DSW may be impacted by material assumptions regarding forecasted product prices, production costs, permitting decisions (most notably the 2030 expiration of the concession, which is assumed to occur for purposes of calculating the reserves; an extension would increase reserves), or other relevant factors that may positively or negatively affect the reserve estimate. For further discussion of the material assumptions relied upon, please refer to Section 12.5 of the Technical Report Summary filed as an exhibit to this Annual Report.
The current life of the mine at DSW is nominally 9 years (to 2030) based on the reserve of 172 Mt (carnallite) and the current annual mining production volume shown above. “Mining” is set at 100% with 0% planned dilution.
Logistics
The potash produced at ICL’s Dead Sea facilities is transported by means of a conveyor belt that was built over 18 kilometers to the railhead located at Tzefa in Mishor Rotem, and from there the output is transported to the Ashdod port by train or by truck, mainly to the Eilat port. Metal magnesium is transported by means of containers that are loaded on trucks from the Company's site in Sodom to the railhead at the Tzefa site. Thereafter, the Company transports the containers to the Haifa/Ashdod ports by means of train.
The port of Eilat is located in the far south of Israel on the Red Sea coast. It is approximately 180 kilometers due south of Rotem and about 200 kilometers from Sodom and is accessible by road. Shipments exiting the Eilat port are to the Far East, whereas sales to Europe and the U.S.USA exit from the Ashdod port. Sales of fertilizers and potash from Rotem and the Dead Sea are not shipped from the Haifa port since it has no infrastructure for loading bulk products and the cost of overland transport is more expensive than transport to Ashdod.Ashdod.
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YPH China
YPC has undertaken that YPH’s mining right in the Haikou mine will not be adversely affected by the above-mentioned arrangements. It was decided that YPH should conduct further communications with YPC and Lindu Company, for the purpose of protecting its legal rights and to urge the parties to reach a fair, just, and reasonable solution to this issue, as soon as possible. Considering the above, ICL did not include this area as part of YPH's reserves.
For further information regarding our concessions in China including royalties, mining licenses, rights and other matters, and for description of certain risks relating to our operations in China, see Note 18 to our Audited Financial Statements and “Item 3 - Key Information— D. Risk Factors”, respectively.
The facilitiesaccess to Haikou mine is by means of the port of Barcelona are managed by ICL Iberia’s subsidiary Tramer and comprise an area of 13 thousand square meters divided into three zones. In order to support the expected operational expansion, the Company is in the process of setting up a new designed facility in the Barcelona port that will replace the current facility, and is making preparations for transition to use thereof. The new facility is expected to be constructed and operative towards the end of 2019 and has 56 thousand square meters and two storages. The new facilities allow to increase the train freight transport of salt and potash up to 2.3 million tonnes.
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Figure 5: Location of Haikou Mine (China)
Mining Concessions and Lease Agreements
YPH holds two phosphate mining licenses that were issued in July 2015, by the Division of Land and Resources of the Yunnan district in China: (1) a networkmining license for the Haikou Mine (hereinafter – Haikou), which the Company operates and which is valid until January 2043, and (2) a mining license for the Baitacun Mine, which was renewed in 2021, and is valid until 2023. The Company intends to conduct a risk survey to assess the feasibility and profitably of underground roads extending 17.5mining the site.
Haikou is an open-pit mining site located alongside the Haikou Town, in the Xishan district, proximate to the city of Kunming. The Baitacun is located several kilometers from the Haikou mine, entrance inwherein the direction of the North Sea. Circa 80 kilometers of underground tunnels are still open to support present production. The mine has easy access to the national road and train transportation routes. The mine receives good quality drinking water and a stable supply of electricity.
The Haikou mine has been in operation since 1966 and the concession area is spread over 9.6 square kilometers. The Haikou mine is divided into four areas. The phosphate sources in areas 1 and 2 have almost been fully depleted. The mining in area 3 began in 2015 and the mining activities in area 4 began at the end of 2017.
For further information regarding our concessions in China including royalties, mining licenses, rights and other matters, and for description of certain risks relating to our operations in China, see Note 18 to our Audited Financial Statements and “Item 3 - Key Information— D. Risk Factors”, respectively.
Operations
The phosphate deposits at both mines are part of an extensive marine sedimentary basin in which the phosphate is situated in two layers – an upper layer and a lower layer. The thickness of the upper layer varies from 2.5 to 11 meters and is about 7.6 meters on average, whereas the thickness of the lower layer varies from 2 to 9 meters and is about 6.1 meters on average. The mining is executed based on layers and quality thereof. Each layer has 3 quality categories: Grade I (highest grade) > 30% P2O5, Grade II- 24%-30% P2O5 and Grade III- 15%-24% P2O5. Structurally, the Haikou mine is moderately complex, which requires precision mining that is accomplished through use of relatively small mining tools. The phosphate is covered by hard rock layers that require blasting, except for the upper ground level, which is removed and used for reclamation of the mined areas. The phosphate layers are also partially hard and require blasting.
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The mining in the Haikou Mine is via open mining using conventional methods by means of drilling and blasting, hydraulic excavators, mining trucks and tractors for mining phosphates.
In the first stage, mining of the upper ground level is being stripped and stored or spread out over mined areas for purposes of reclamation. In the second stage, drilling, blasting and stripping of the upper overburden level is executed. In the third stage, mining of the phosphate is performed by drilling and blasting of every layer separately (between which an interburden layer exists having a thickness of 11 meters, which is also drilled, blasted and stripped) and the phosphate is then loaded on truck and being transported to the beneficiation plants.
Based on the patches' appearance of the medium and high-grade phosphate, the mining is performed through use of small mining tools, trucks with a capacity of 40 tons and excavators having a bucket capacity of 3 to 6 cubic meters.
The phosphate is low organic type, and as such it is suitable for phosphoric acid production. Close to the Haikou mine, there are two beneficiation plants: flotation and scrubbing. These facilities are accessible by roads, and the scrubbing plant is accessible by roads and train. The output of these facilities is designated for the production plants of acids and fertilizers, located several kilometers from the Haikou mine, which include four sulphuric acid factories, three green phosphoric acid factories, one factory for manufacture of technical grade white phosphoric acid, one factory for manufacture of food grade white phosphoric acid and an additional six fertilizer factories. These factories are powered by electricity generated from the sulphuric acid production process as well as from the national power network. These facilities have been continuously developed and maintained for the last 40 years and are in a good condition. The access to the production site is also by road and train.
Production
The following table sets forth the amount of our total mine production of raw ore at the Haikoumine (and the relevant grade) supplied to our beneficiation plants, for the three years ended December 31, 2021, 2020 and 2019:
| Year Ended December 31, | |||
| 2021 | 2020 | 2019 | |
| Millions of tons produced | 2.66 | 2.40 | 2.15 |
Grade (% P2O5 before/after beneficiation) | 21% / 28% | 21% / 29% | 21% / 29% |
| (1) | All figures are rounded to reflect the relative accuracy of the estimate, and numbers may not sum due to rounding. |
The following table sets forth the approximate amounts of product produced after processing by our operations at the Haikou mine, for the three years ended December 31, 2021, 2020 and 2019:
| Year Ended December 31, | |||
| 2021 | 2020 | 2019 | |
| thousands of tons | thousands of tons | thousands of tons | |
| Phosphate Rock * | 2,194 | 2,044 | 1,946 |
| Green Phosphoric Acid | 673 | 632 | 637 |
| Fertilizers | 612 | 584 | 516 |
| White Phosphoric Acid | 83 | 71 | 64 |
| Specialty Fertilizers | 76 | 55 | 46 |
*including Enriched & Grinding Rock
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Property Value
As of December 31, 2021, the overall book value of the property, plant and equipment of Haikou amounted to about $307 million.
Mineral Resource Estimate
The Mineral Resource is reported as in-situ and exclusive of the Mineral Reserve tons and grade. Mineral Resource categorization of Measured, Indicated, and Inferred Mineral Resources, presented in Table 1, is in accordance with the definitions presented in Pan European Reserves and Resources Reporting Committee (PERC) Standard for Reporting of Exploration Results and in S-K 1300.
YPH JVHaikou – Summary of Phosphate Mineral Resources at the end of the fiscal year ended December 31, 2021, based on three-year average market prices used to calculate our reserves at the Haikou mine as of December 31, 2021 are as follows: $406 per ton for green phosphoric acid (MGA), $931 per ton for white phosphoric acid (WPA), $1,024 per ton for MKP, $211 per ton for GTSP, $328 per ton for NPS, $268 per ton for MAP 55% and $652 per ton for MAP 73%.
| Measured | Indicated | Inferred | Measured + Indicated | Cut-off Grades (P2O5) | Metallurgica Recovery(P2O5) | |||||
| Mining Area | Mt | (P2O5) | Mt | (P2O5) | Mt | (P2O5) | Mt | (P2O5) | ||
| Block 1 and 2 | 0.6 | 23.0% | 0.02 | 22.4% | - | - | 0.7 | 23.0% | 15% | 89.3% |
| Block 3 | 1.6 | 22.0% | 2 | 24.1% | - | - | 3.8 | 23.2% | ||
| Block 4 | 0.7 | 22.4% | 0.2 | 23.1% | 0.2 | 20.0% | 0.9 | 22.5% | ||
| Total | 3 | 22.3% | 2.3 | 24.0% | 0.2 | 20.0% | 5.3 | 23.0% |
| (1) | Mineral Resources are reported on a dry in-situ basis and are exclusive of Mineral Reserves. |
| (2) | All figures are rounded to reflect the relative accuracy of the estimate, and numbers may not sum due to rounding. |
| (3) | Mineral Resources are classified in accordance with the Pan European Reserves and Resources Reporting Committee (PERC) Standard for Reporting of Exploration Results. |
| (4) | The reported Mineral Resource estimate was constrained by limiting polygons for the purpose of establishing reasonable prospects of economic extraction based on potential mining, metallurgical and processing grade parameters identified by mining, metallurgical and processing studies performed to date on the project. A minimum cut-off grade of 15% P2O5 has been applied for reporting purposes. |
As of December 31, 2021, Haikou had 5.3 Mt of phosphate resource. We are reporting Mineral Resources at Haikou in accordance with the guidelines of PERC for the first time in 2021 The mineral resources estimate for Haikou is based on factors related to geological and grade models and the prospects of eventual economic extraction. For further discussion of the material assumptions relied upon, please refer to Section 11.6 of the Technical Report Summary filed as an exhibit to this Annual Report.
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Mineral Reserve Estimate
Haikou mine has 57.7 million tons (after deduction of 5%: losses 3% and dilution 2%) of proven reserves of phosphate rock which located in 4 separated blocks (blocks 1-4). The annual average production capacity is around 2.9 million tons (in 2021 2.66 million tons were mined). The proven reserves are sufficient for almost 21 years at such rate. Another 4 million tons of phosphate is placed in several piles around the mine and this reserve will be fed to the flotation plant in the next few years.
The average quality of the phosphate is around 21.8% P2O5 and is divided into 3 grades: Grade I (highest grade) > 30% P2O5, Grade II- 24-30% P2O5 and Grade III- 15-24% P2O5. Around 20% of the phosphate has >27% P2O5 and is usually beneficiated in the scrubbing facility, in the flotation plant, or in the grinding facility.
In determining these reserves, a cut-off grade of 15% P2O5 was applied in accordance with the flotation ability to produce usable concentrate rock (28.5% P2O5), which is the average quality required to produce phosphoric acid in the Yunnan region. In practice, the Haikou mine is able to process and use all the phosphate that exists in the deposit. The phosphate layers’ borders are physically well defined, also has very low P2O5 content (usually around 5%), and the mining process does not leave any unmined phosphate below the cut-off grade behind.
The reported Mineral Reserve estimate was constrained by Pit designs and includes diluting materials and allowances for losses. All Proven Reserves were derived from the Measured Mineral Resource classification, and all Probable Reserves were derived from the Indicated Mineral Resource classification only. The results of the Mineral Reserve estimate are supported by the outcomes of an economic analysis completed in support of the operational business plan. The QP is satisfied that the stated Mineral Reserves classification of the deposit appropriately reflects the outcome of the technical and economic studies.
The three-year average market prices used to calculate our reserves at the Haikou mine as of December 31, 2021 are as follows: $406 per ton for green phosphoric acid (MGA), $931 per ton for white phosphoric acid (WPA), $1,024 per ton for MKP, $211 per ton for GTSP, $328 per ton for NPS, $268 per ton for MAP 55% and $652 per ton for MAP 73%.
In calculating the reserves, an average of the previous three years’ currency exchange rates is used to ensure economic feasibility. The three-year average currency conversation rates used to calculate our reserves as of December 31, 2021 are as follows: 6.75 RMB per $1.00.
The life of the mine at Haikou is approximately 23years, based on reserves of approximately 57.7million tons (given the annual average production (mining) capacity of around 2.5million tons); The phosphate from Haikou mine is suitable for phosphoric acid production.
Based on the Company's knowledge, we have all government's approvals and permits that are necessary for our reserves in China.
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The following table sets forth our estimated phosphate reserves at the Haikou Mine as of December 31, 2021:
YPH Haikou – Summary of Phosphate Mineral Reserves at the end of the fiscal year ended December 31, 2021, based on three-year average market prices used to calculate our reserves at the Haikou mine as of December 31, 2021 are as follows: $406 per ton for green phosphoric acid (MGA), $931 per ton for white phosphoric acid (WPA), $1,024 per ton for MKP, $211 per ton for GTSP, $328 per ton for NPS, $268 per ton for MAP 55% and $652 per ton for MAP 73%.
| Category | Low Organic Phosphate (Mt) | Average Grade (P2O5) | Cut-off Grade (P2O5) | Metallurgical Recovery (P2O5) |
| Block 1 + 2 | Proven | 6.9 | 21.8% | 15% | 89.3% |
| Probable | – | – | |||
| Block 3 | Proven | 39.0 | 21.9% | ||
| Probable | – | – | |||
| Block 4 | Proven | 11.9 | 21.3% | ||
| Probable | – | – | |||
| Total | Proven | 57.7 | 21.8% | ||
| Probable | – | – |
| (1) | All figures are rounded to reflect the relative accuracy of the estimate, and numbers may not sum due to rounding. |
| (2) | Mineral Reserves reported on a dry basis delivered to the processing plant primary crusher. |
As of December 31, 2021, Haikou had 57.7Mt at 21.8% of phosphate reserves compared to 51Mt at 21.9% as of December 31, 2020, an increase of 13% contained phosphate. This increase was primarily driven by a change in methodology used to calculate reserves and was partially offset by production. Assumptions regarding the technical parameter analysis, forecasted product prices, production costs, permitting decisions, or other factors may positively or negatively affect the reserves estimates.
Logistics
YPH holds the Haikou mine, several factories for production of various types of fertilizers located close to the Haikou mine and two plants for production of downstream products – one located close to the Haikou mine and the fertilizers factory and the other situated proximatein proximity to the Kunming airport.
Most of the transport of thetransported raw materials from the Haikou mine to the acid factories is executed via pipeline (slurry), whereas a small part of the raw rock is transported by trucks.
Most of the outputoutputs are sold to the local market isin North China and are transported from the fertilizersfertilizers' factory directly to the customers, in North China by train as well as throughor marine shipment, mainly from two exit ports (Beihai(QinZhou port and Fangchengang). These ports are also used for import of sulphur, in the amount of 600 thousand tonnes per year. A, while a small part of the output sold is transported to customers in the Yunnan region. Fangcheng port and Zhanjiang port are also used for importing sulphur, in the amount of 600 thousand tons per year subject to YPH’s demand and option through existing sources.
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Item4A – UNRESOLVED STAFF COMMENTS
Not Applicable.
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Item5 – OPERATING AND FINANCIAL REVIEW AND PROSPECTS
A. OPERATING RESULTS
Principal Factors Affecting Our Results of Operations and Financial Condition
The following table sets forth the total Government Takes (GT) the Company had paid to the State of Israel in 2021, 2020 and 2019:
| Year Ended December 31, | $ millions | NIS millions |
| 2021 | 507 | 1,636 |
| 2020 | 346 | 1,192 |
| 2019 | 425 | 1,514 |
The GT include, among others, royalties, leases, dividend withholding tax, payroll taxes and social security and payments relating to taxes, including advances regarding the Surplus Profit Levy.
In 20182021 and 2017, approximately 49%2020, about 4% and 53%5%, respectively, of our total sales revenue wasderived from sales in Israel. In 2021 and 2020, about 49% and 48%, respectively, of our total sales derived from production activities taking place outside Israel and approximately 7% and 8%, respectively, of the cost of sales of products produced outside Israel was attributable to raw materials supplied from Israel. There is nonot a single customer on which we are materially dependent, or a single customer that accounted for more than 10% of the Company’s total sales revenue in 2018.2021.
Trends affecting our operating expenses
Energy expenses accounted for approximately 6% and 7% of our total operating costs in 20182021 and 2017, increased year over year by2020, respectively, a year-over-year increase of approximately 2%10%. Electricity expenses in 20182021 and 20172020 amounted to $163$147 million and $190$113 million, respectively, comprising 47%42% and 56%36%, respectively, of theour total energy expenses. Natural gas expenses in 20182021 and 20172020 amounted to $123$131 million and $87$139 million, respectively, comprising 35%38% and 25%44%, respectively, of theour total energy expenses. Oil and oil products expenses in 20182021 and 20172020 amounted to $17 million and $15 million, and $16 million, respectively, comprising 4% andeach accounting for 5%, respectively, of theour total energy expenses.
ICL is one of the largest natural gas consumers in Israel and is taking measureshas taken a strategic decision to increase the use of natural gas to power its largest production plants in itsIsrael. This transition of ICL’s facilities in order tohas significantly reducereduced emissions of air pollutants in the areaareas surrounding itsICL facilities, improveimproved the quality of the output, reducereduced maintenance expenses, and leadhas led to a significant monetary savings due to the transitiontransiting away from the use of more expensive fuels. For further information, including details of the specific natural gas purchasing agreements undertaken by the Company, see Note 18 to our Audited Financial Statements and “Item 4 - Information on the Company— B. Business Overview—Regulatory and Environmental, Health and Safety Matters — Energy”.
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Marine transportation expenses in 20182021 and 2017 were2020 amounted to approximately 7%$369 million and $213 million, respectively, comprising 6% and 5%, respectively, of our total operating costs, respectively, and amountedcosts. The increase is primarily attributed to approximately $355 million and $306 million, respectively. Thean increase in marine transportation expenses is primarily attributed to the increase in marine transportation prices compared to last year, as the monthly average marine transportation price index (Baltic Dry Index – “BDI”) for 2018 was 17% higher than the monthly average index for 2017.prices.
Our financial statements are presented in U.S.US dollars. Most of our sales are in U.S.US dollars, even though a portion of our sales is in other currencies, mainly euros. Part of our operating expenses in Israel are denominated in NIS and, consequently, devaluation of the average NIS exchange rate against the U.S.US dollar has a positive impact on our profitability, while appreciation has the opposite effect. Devaluation of the average exchange rate of the euro against the U.S.US dollar has a negative impact on our profitability, while appreciation has the opposite impact. On the other hand, devaluation of the euro against the U.S.US dollar improves the competitive ability of our subsidiaries whose functional currency is the euro, compared with competitors whose functional currency is the U.S. dollar. In 2018,2021, the Company's operational results were positivelynegatively impacted mainly by the upward revaluation of the dollar, mainlyshekel against the shekel.dollar during the year, partly offset by the upward revaluation of the euro against the dollar and the devaluation of the Brazilian real against the dollar. For further information, see "Results“Item 5 – Operating and Financial Review and Prospects— A. Operating Results— Results of Operation" chapter below.Operations”.
We hedge part of our exposure to the risks described above, which include exposure to sales and operating expenses that are not denominated in our functional currency, mainlycurrency. The main exposure drives from operating expenses denominated in NIS and other currencies that are not the functional currency of our subsidiaries, and exposure to marine transportation prices and energy prices. Since all these hedging transactions are treated as economic (non‑accounting) hedges, they are not reflected in our operating costs, but instead are recorded as finance income or expenses in our statements of income. Our management determinedetermines the extent of our hedging activities based on their estimation of our sales and operating expenses, as well as their expectations of the developments in the markets in which we operate. See “Item 11 - Quantitative and Qualitative Disclosures about Market Risk— Risk Management”.
Trends Affecting our segments
We continue to take measures to ensure the health and safety of our employees in all of our facilities and offices, as well as those of our suppliers, our business partners, and the communities in which we operate, to maintain the level of operations throughout our various facilities around the world, and to minimize the pandemic’s potential impact on our business.
We have modified some of our work practices to enable our employees to accomplish critical tasks in new ways, leveraging innovation and prioritizing resources. We have implemented communication technologies to maintain work routines, enabling our employees to engage with each other, as well as with our business partners, through digital platforms and other remote access tools.
In 2021, manufacturing continued at our sites around the world without interruption. We have not experienced material delays in production or distribution. The Company continues to respond to the evolving business environment, adjusting to rapidly changing conditions, taking appropriate measures to further enhance operational efficiency and profitability.
However, it remains difficult to assess the future impacts of the pandemic on our operations in light of the uncertainty of its duration, the extent of its intensity, its effects on global supply chains and global markets, the extent of its impact on the markets in which we operate, especially on emerging markets and the impact of additional countermeasures that may be taken by governments and central banks.
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Trends Affecting Industrial Products segmentSegment
The operations of ICL's Industrial Products segment are largely affected by the level of activity in the electronics, construction, automotive, oil drilling, furniture, pharmaceutical, agro, textile and water treatment markets.
In 2018,2021, about 40%45% of the worldwide use of bromine was for flame retardants, about 30% was for intermediates and industrial uses, the rest20% was for clear brine fluids and the remainder was used for intermediates, industrial uses, water treatment and other uses.
In 2018,2021, ICL sold approximately 240264 thousand tonnestons of Brominebromine compounds 90(25% higher compared to 2020), 87 thousand tonnestons of Phosphorousphosphorus compounds 40(9% higher compared to 2020), 43 thousand tonnestons of Magnesiamagnesia and Calciumcalcium products (2% higher compared to 2020) and 350331 thousand tonnestons of Dead Sea Salts.Salts (3% higher compared to 2020).
During 2021, the Industrial Products segment experienced significant recovery in most markets, achieving all-time records of annual sales and operating income, driven by strong demand for the segment's products. This can be attributed to several factors including the record high bromine price in China, which derived from the government's restrictions on energy consumption, as well as safety and environmental audits that effected local bromine production, increased demand for bromine based flame retardants supported by the segment's production capacity expansions, the continued recovery in oil prices leading to renewal of drilling activities and the strong demand for phosphorus based flame retardants which benefitted from environmental restrictions on Chinese producers as well.
Below are the trends of the business lineline’s main activities -
Flame retardants: 2021 was characterized by high demand across all applications, mainly driven by strong demand in most end markets such as printed circuit boards, electronics, automotive and textile which is correlated with recovery of the worldwide economic activity beginning end of 2020 and during 2021.
Demand for ICL's phosphorus-based flame retardants was high during 2021 as Chinese regulatory authorities required the shutdown and relocation of several local production facilities located in dense population areas. Furthermore, Chinese authorities imposed energetic restrictions on large energy consumers, including phosphorus producers, resulting in Chinese phosphorus supply disruptions. In addition, demand was high in the construction and automotive industries.
The trend of pressure exerted by “green” organizations in the area of environmental protection to reduce the use of bromine-based flame retardants is continuing.continues. On the other hand, development and commercialization of new sustainable polymeric or reactive bromine-based flame retardantsretardants. along with new fire safety regulations in developing countries and as part of new growing global trends, are serving to increase the use of these products.
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Elemental bromine: 2021 was characterized by continuationhigher elemental bromine sale quantities and record high selling prices, driven by high demand from one side and natural depletion of stricter environmental pressurebromine resources in China, which hadChinese bromine supply disruptions following governmental restrictions on local production and strong demand for brominated flame retardants on the other side. Commencing November 2021, a very significant impact on availabilityrelative softening of chemicals in the market andbromine demand was evident.
Clear brine fluids: 7-year record high oil prices led to an increaserecovery and renewal of drilling activities in prices. Pricesseveral global regions and higher year-over-year demand. The Industrial Products segment enjoyed the advantage of bromine-based flame retardants were also supported by an increase in elemental bromine prices in China.
Inorganic bromides: Demand returned for Mercury emissions control, supported by high natural gas prices and retirements of old coalwhich caused many power plants which doubled in 2018 compared to 2017, negatively impacted demand. switch back to coal as the primary energy source.
In addition, there was a moderate increase inincreased demand for additional bromine‑based products as a result of improvingHBr for the Purified Terephthalic Acid (PTA) market, mainly in China, following growth in the GDP.
Higher BOIs sales were due to high demand in the agrochemicals markets.agro & pharma markets, together with low supply from China.
Phosphorus-based industrial compounds: Slightly higher sales are attributed to recovery of the aviation sector after the 2020 COVID-19 pandemic peak, as well as to higher demand of power plants fluids following maintenance shutdowns that were postponed from 2020 to 2021, which was necessary to cope with the increase of private consumption during the pandemic in 2020. New power plants fluids business opportunities in China are an additional factor contributing to the increase in sales.
Magnesia and Calcium Products: Most magnesia and Calcium product lines were sold out, due to strong demand from the dietary supplements and pharmaceutical end-markets, and as selling prices continued to increase.
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Trends Affecting Potash Segment
In addition, the WASDE report, published by the USDA in February 2022, further supported the above, while showing a decrease in the expected ratio of the global inventories of grains to annual consumption to 28.4% for the 2021/22 agriculture year, compared to 29.2% for the 2020/21 agriculture year, and 30.5% for the 2019/20 agriculture year.
Global potash market - average prices and imports:
| Average prices | 2021 | 2020 | VS 2020 |
| Granular potash – Brazil | CFR spot ($ per tonne) | 534 | 238 | 124.4% |
| Granular potash – Northwest Europe | CIF spot/contract (€ per tonne) | 361 | 244 | 48.0% |
| Standard potash – Southeast Asia | CFR spot ($ per tonne) | 389 | 245 | 58.8% |
| Potash imports | ||||
| To Brazil | million tons | 12.6 | 11.0 | 14.5% |
| To China | million tons | 7.6 | 8.7 | (12.6)% |
| To India | million tons | 2.5 | 4.1 | (39.0)% |
Sources: CRU (Fertilizer Week Historical Price: January 2022), FAI, Brazil and Chinese customs data.
It should be noted that in June 2021 Canpotex member, Mosaic, announced an estimated decrease in production of 1Mt from July 2021 to March 2022, due to a halt in operations of its K1 and K2 mines, as a result of increased throughout 2018flooding, and the re-operation of its Colonsay site to offset this loss, which was later announced to be earlier than expected. Another Canpotex member, Nutrien, reported that it would increase accordingly its production from the fourth quarter of 2021.
In addition, the Australian BHP mining company announced in August 2021 that it intends to fund the continuation of its Jansen project (in Saskatchewan, Canada), thereby expressing confidence in the medium to long-term potash market, given that this projected ramp-up is forecasted in 2027.
Global potash prices have been strongly supported by recordtight supply and by the ongoing political condition in Belarus, which began in August 2021, following an incident in which a commercial airliner was forced down, leading to uncertainty regarding continued supply from Belaruskali by BPC, its trade arm.
For reference, in 2020, Belaruskali was responsible for about 21% of potash demand of 66.8 million tonnes, growth of 0.3% compared to 2017exported globally (according to CRU, August 20182021). In January 2021, BPC announced the sale of 800 thousand tons of potash to India at a price of $247 per ton (CFR), $17 above the price concluded in its previous contract, while in February 2021, BPC announced that it reached an agreement with its customers in China for potash supply at the same price, which reflected an increase of $27 per ton over the previous contract price. As a result, several large potash producers responded with dissatisfaction noting that this price does not reflect conditions in the global potash market. In April 2021, BPC revised its contract price in India to $280 per ton (CFR), following which ICL and FerteconAPC supply contracts were concluded at the same price.
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In June 2021,the EU imposed sanctions on Belarus following the aforementioned incident from May 2021, in which a commercial airliner was forced down by Belarus, limiting the potash grades that can be traded, although it remains the EU’s main export. In August 2021, the UK joined the EU sanctions in light of the accumulation of immigrants at Belarus-EU borders. That same date, Canada and the USA also imposed sanctions on Belarus, however, in December 2018)2021, the implementation of the American sanctions, which included a ban of trade that limited access to the US dollar-based financial system, thus having an unstated extra-territorial effect, was postponed from December 2021 to April 2022 maintaining favorable prices despite the seasonal nature of that period. Prices further increased following the submission of a draft law, in mid-December 2021, by Lithuania’s transport ministry for the immediate termination of any business activities with Belarus but stabilized toward the end of December.
Another factor that contributed to the satisfactory price environment was the increased uncertainty in USA potash supplies in September 2021, as a result of Hurricane Ida’s damage to the Mississippi river system and good spring weather forecasts. The global uncertainty in potash supply increased in November, due to storm damage to railways in Canadian British Columbia, specifically those leading to the port in Vancouver.
Magnesium Trends
During the second half of 2021, the magnesium global market experienced a severe shortage of supply due to an energy shortage and as a result of environmental and safety audits carried out in several provinces in China, pushing up market prices. Demand in the aluminum market (in which magnesium is used as a strengthening element) was strong following the global economy recovery, after the negative impact of COVID-19 in 2020. The demand from the automotive sector was impacted by the global shortage in semiconductor chips.
Trends Affecting Phosphate Solutions segment
Phosphate specialties sales amounted to $1,341 million in 2021 approximately 18% higher than 2020 based on record sales along the entire phosphates value chain.
Sales of phosphate commodities amounted to $1,135 million in 2021, approximately 34% higher than 2020, mostly due to significantly higher market prices, which was partly offset by lower sales volumes. A significant year-over-year increase in average selling prices of phosphate fertilizers, partly offset by higher raw materials costs and lower sales volumes, led to an operating income of $152 million in 2021, compared to operating loss of $51 million in 2020.
Global phosphate specialties were not significantly disrupted during the full year of 2021, despite the logistical and operational restrictions imposed in certain countries due to the ongoing spread of the COVID-19 pandemic. ICL’s robust and diversified customer portfolio and the wide geographic reach of its phosphate specialties businesses - coupled with strong demand for salts and acids - prevented a material impact from the pandemic on the segment's business performance. On the contrary, as a result of the continued pressure on the supply chain, raw materials, and production costs, prices and demand for phosphate supply and our product solutions increased significantly year-over-year.
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Food grade phosphates sales were notably higher year-over-year with a continued focus on integrated solutions and next generation product development.
Sales of Industrial salts increased year-over-year, with higher demand in all regions and most industries, supported by continued recovery from COVID-19 related weakness in 2020.
Purified phosphoric acid (WPA) revenues increased year-over-year with higher sales volumes and prices in all regions. In addition, Company’s YPH joint venture in China has been experiencing growing demand for its specialty mono ammonium phosphate (MAP) solutions for production of lithium iron phosphate (LFP) batteries, destined for electric vehicles and other energy storage offerings. ICL continues to explore ways to expand its presence in this evolving market in Asia, North America and Europe, through capacity expansions and business development.
Dairy proteins sales decreased year-over-year, due to reduced demand from key customers for organic products, which was partially offset by conventional milk and goat ingredients. ICL continues to focus on expanding its global leadership position in the organic cow and goat ingredients market for high-end applications.
In the fourth quarter of 2021, ICL opened its alternative-protein facility in St. Louis, US, which will produce a plant-based meat substitute for use by food companies, food-service distributors, restaurants and grocery chains. The significant investment represents an expansion of ICL’s global Food Specialties portfolio and the company’s focus on developing healthier and more sustainable food products.
Phosphate commodity fertilizers prices surged during 2021 following crop prices surge, due to worldwide governments’ food security concern policy adoption continuation, especially by the Chinese one, on the light of COVID-19 pandemic continuing spread. This was boosted by restricted supply by China and Russia, following July 22 China’s State Administration for Market Regulation (SAMR) guidance of local manufacturers to take care for a minimal domestic stock, followedby its September 27 order to halt exports till June 2022, while in October 2021, the Chinese customs started enforcing this order in ports. In Russia, the authorities-imposed on November 3, 2021, quotas regarding Nitrogen containing fertilizers exports valid from December 1 to May 31, 2022, due to a surge in global Natural gas prices.
In the US, this was boosted, mainly with regard to MAP, following US International Trade Commission (ITC) decision from March 11, 2021, to ratify the Department of Commerce (DoC) decision from February 9, 2021, to accept Mosaic’s June 26, 2020, petition to impose countervailing duties on imports of phosphate fertilizers from Morocco and Russia, while setting rates of 19.97%, 9.19% and 47.05% on phosphate fertilizers imports from OCP, PhosAgro and EuroChem, respectively, for at least 5 years. Hurricane Ida damages, in the period between late August and early September, to the Mississippi River system, as well as low availabilityto Mosaic’s production plants, boosted this even further, leading last company to announce an estimated production cut of potash300,000 tons, although in November 2021, the company announced the reoperation of its Louisianan’s site.
In Brazil, MAP prices surged during year’s beginning, but lowered its pace towards year’s end due to among other things, slower than expected ramp-upaffordability destruction and the high imports from China, Morocco, and Russia.
In India, domestic depleting DAP stocks on the light of new capacity. Prices remained firm intocontinuing global DAP prices surge led the off-season periodlocal government to change twice its original decision not to increase DAP’s Nutrient Based Subsidy (NBS) for the 2021/22 agricultural year of 2018 year-end10,213 INR/t, first to 24,213 INR/t on May 10 and early 2019, which may be considered asthen to 32,991 INR/t on October 12.
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OCP (Morocco) concluded October 29 its fourth quarter phosphoric acid supply contracts to India at a price of $1,330 per ton (CFR 100% P2O5), an increase of $170 per ton compared to the previous quarter. This was the seventh consecutive price increase indicated in these quarterly contracts since the first quarter of 2020, with an accumulated increase of $740/ton, reflecting the continuing positive indication going forward. Accordingglobal sentiment in the phosphate commodity fertilizers market. OCP hasn’t concluded yet its phosphoric acid supply contracts to India for 2022 first quarter.
Global phosphate commodities market - average prices:
| Average prices | $ per ton | 2021 | 2020 | VS 2020 |
| DAP | CFR India Spot | 618 | 331 | 87% |
| TSP | CFR Brazil Spot | 562 | 251 | 124% |
| SSP | CFR Brazil inland 18-20% P2O5 Spot | 297 | 177 | 68% |
| Sulphur | Bulk FOB Adnoc monthly contract | 181 | 60 | 202% |
Source: CRU (Fertilizer Week Historical Prices, January 2019) the average spot price of granular potash imported to Brazil during 2018 was $320 per tonne (CFR), up by approximately 22% compared to 2017.The average spot price of standard potash exported from Vancouver during 2018 was $241 per tonne (FOB), up by approximately11% compared to 2017.
| $ per tonne | 1-12/2018 | 1-12/2017 | % vs 2017 |
| DAP (Bulk CFR India Spot) | 423 | 363 | 17% |
| TSP (Granular Bulk FOB Morocco Spot) | 338 | 277 | 22% |
| MAP (Granular Bulk CFR Brazil Spot) | 438 | 369 | 19% |
| Phosphate Rock (68-72% BPL) (FOB Morocco Contract) | 91 | 90 | 1% |
Trends affecting Innovative Ag Solutions segment
Innovative Ag Solutions segment is active in two main markets: agriculture and turf & ornamental markets. The specialty fertilizers business is characterized by higher efficiency resulting in higher prices and lower quantities compared to the traditional commodity fertilizers.
Traditional Commoditycommodity producers continue to stepexpand into the specialty fertilizers markets, offering specialized, higher value and higher price products. Consolidation is another global trend, characterized by mergers of large fertilizer suppliers as well as acquisition of small specialty fertilizer players by the large input players.
Specialty Agriculture marketsmarkets:
The specialty agriculture markets include all open field crops (rice, maize, potatoes etc.), orchards and greenhouses.
Specialty agriculture markets are constantly growing, driven by global population growth, lack of arable land and regulation.regulations. New regulations, both local and national, requiresrequire limiting the amountamounts of fertilizers applied, thus increasing the usage of efficient fertilizers application. An example forfertilizer applications. Examples of such regulation can be found in limitingChina’s limitation of nitrogen use and the nitrogen usage in China, and controlling thecontrol of nitrogen leaching in someseveral countries in Europe. Growth in demand growth is significant in China, India and Brazil, while in Europe growth is more moderate. This growth was inhibitedmoderate.
During 2021, sales volumes of specialty agriculture products increased, supported by economic crisesCOVID-19-related strong demand, as well as the appreciation of the euro against the US dollar. Selling prices were higher compared to 2020 in Turkey, but this market is gradually recovering since early 2019.most product lines, driven by strong demand, supply chain constraints and higher raw materials prices.
Sales volumes of straight fertilizers improved during the year, supported by increased production capacity and disruptions in Chinese supply.
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The competitive landscape in the soluble fertilizer marketsmarket continues to develop, with commodityevolve, as some commodity-oriented players such as Eurochem,are strengthening their positionpositions in the specialty fertilizer markets with a full range offer of water solublewater-soluble MAP, water soluble NPK and NOP. There has been a substantial increase in capacity of WSNPK blending in China, encouraged by a government policy to improve fertilizer application efficiency and reduce total fertilizer consumption. WSNPK is seen as more efficient than traditional commodity fertilizers. In parallel, compound NPK producers are searching for a new growth engine, which is also fueling the growth of WSNPK capacity.
As part of the Company's strategy to grow its crop nutrition businesses organically and through M&A, in January 2021, ICL completed the acquisition of Fertiláqua, one of Brazil's leading specialty plant nutrition companies. ICL expects to leverage Fertiláqua's strong market presence and distribution capabilities to increase the sales of its organic fertilizers, controlled-released fertilizers and other specialty plant nutrition products to the Brazilian market, one of the world's fastest growing agriculture markets. Fertiláqua also expands ICL's specialty crop nutrition product portfolio with complete plant life-cycle solutions for plant nutrition & stimulation, soil revitalization, seed treatment and plant health utilized across all key Brazilian crops, including soybeans, corn, sugarcane, cotton, coffee, fruits and vegetables.
In July 2021, the Company successfully completed the acquisition of the South American plant nutrition business of ADS. ADS offers a broad range of solutions for plant nutrition and stimulation, soil treatment, seed treatment and plant health, covering all key Brazilian crops and as such, significantly expands ICL’s product portfolio and profitability, while providing further seasonal balance between the Northern and Southern hemispheres.
The strategic acquisition of these two specialty fertilizer businesses positions ICL as the leading specialty plant nutrition company in Brazil, one of the world’s fastest growing agriculture markets.
Turf and Ornamental Horticulture
Turf and Landscape
The segment’s Turf and Landscape market isbusiness serves the market for professional turf (i.e. golf & sport fields) and the landscape & lawn service market.markets.
During 2021, the professional turf market demand experienced strong growth for all product categories, supported by the golf sector due to higher usage rate of golf courses, leading to more maintenance and new applications.
The landscape market continued to grow in Europe. As many consumers stayed at home due to COVID-19 lockdowns and restrictions looking for specialty fertilizersprofessional support from landscapers to maintain or renew their gardens. Furthermore, in key countries in Europe, in 2018 was mainly impacted by the late Spring andhousing market expanded increasing the severe drought during the Summer of 2018. This limited the number of applications of granular fertilizers during the season in golf and sport fields. However, the drought drove demandneeds for liquids & wetting agents. Usually after a drought demand for seeds increase due to the need to renovate the turf.
There is a slow but noticeable trend of consolidation in the distribution chainchannels in the Turf & Landscape market.
ICL Group Limited 174
Ornamental Horticulture
The Ornamental Horticulture market includes container nursery growers, pot-plants and bedding plants. Global demand has moderately recovered due to the improvement in global economy contributing to the housing and landscape market.plants (greenhouses).
Expected Expenses for Equity and Cash Compensation Plans
Based on the existing grants under the amended 2014 Equity Compensation Plan, the expected expensetotal expenses for the periods ended December 31, 2019,2022, December 31, 20202023, and December 31, 2021 is2024, are approximately $6.3$16 million, $2.1$8 million, and $0.3$3 million, respectively.
For a description of the 2014 Equity Compensation Plan and additionalfurther information about the grants made under the 2014 Equity Compensation Plan, see Note 21 to our Audited Financial Statements.
| For the Year Ended December 31, | |||||
| 2018 | 2017 | 2016 | 2015 | 2014 | |
| US$ millions | |||||
| Operating income (loss) | 1,519 | 629 | (3) | 765 | 758 |
| Impact of employee strike (1) | - | - | - | 248 | 17 |
| Capital (gain) loss (2) | (841) | (54) | 1 | (215) | (36) |
| Impairment of assets (3) | 19 | 32 | 489 | 90 | 71 |
| Provision for early retirement and dismissal of employees (4) | 7 | 20 | 39 | 48 | - |
| Provision for legal claims (5) | 31 | 25 | 5 | 38 | 149 |
| Provision for historical waste removal and site closure costs (6) | 18 | - | 51 | 20 | - |
| Other | - | - | - | - | 1 |
| Total adjustments to operating income (loss) | (766) | 23 | 585 | 229 | 202 |
| Adjusted operating income | 753 | 652 | 582 | 994 | 960 |
| Net income (loss) attributable to the shareholders of the Company | 1,240 | 364 | (122) | 509 | 464 |
| Total adjustments to operating income (loss) | (766) | 23 | 585 | 229 | 202 |
| Adjustments to finance expenses (7) | 10 | - | 38 | - | 31 |
| Total tax impact of the above operating income & finance expenses adjustments | (7) | (4) | (81) | (58) | (64) |
| Tax assessment and deferred tax adjustments (8) | - | 6 | 36 | 19 | 62 |
| Adjustments attributable to the non-controlling interests | - | - | (5) | - | - |
| Total adjusted net income - shareholders of the Company | 477 | 389 | 451 | 699 | 695 |
In addition, based on long-term incentive framework (hereinafter – Cash LTI Plan), the expected total expenses for early retirementthe next 3 years are about $40 million. The expenses are subject to achievement of certain financial targets over the 3 years and dismissal of employees in accordance with the Company’s comprehensive global efficiency plan in its production facilities throughout the group. In 2015, with respect to the Bromine’s facilities in Israel and the Company’s facilities in the United Kingdom. In 2016, with respect to the Bromine’s facilities in Israel, the Company’s facilities in the United Kingdomand the facilities of the joint venture in China (reflected also in the non-controlling interests’ adjustment below). In 2017, provisions relating to ICL Rotem’s facilities in Israel, and to subsidiaries in North America (Everris NA Inc.) and Europe (Everris International B.V and BK Giulini GmbH). In2018, provision relating to the Company’s facility in the United Kingdom (ICL Boulby). See also – Note 18 to our Audited Financial Statements.
ICL Group Limited 175
Results of Operations
We have elected to omit discussion on the earliest of the main trendsthree years covered by the consolidated financial statements presented. Refer to Item 5 - Operating and Financial Review and Prospects located in its businesses.
Set forth below are our results of operations for the years ended December 31, 20182021 and 2017.2020.
| For the Years Ended December 31, | % Increase (Decrease) | ||
| 2021 | 2020 | ||
| $ millions | $ millions | ||
| For the Years Ended December 31, | % Increase (Decrease) | ||
| 2018 | 2017 | ||
| $ millions | $ millions | ||
| Sales | 5,556 | 5,418 | 3% | 6,955 | 5,043 | 38% |
| Cost of sales | 3,702 | 3,746 | (1)% | 4,344 | 3,553 | 22% |
| Gross profit | 1,854 | 1,672 | 11% | 2,611 | 1,490 | 75% |
| Selling, transport and marketing expenses | 798 | 746 | 7% | 1,067 | 766 | 39% |
| General and administrative expenses | 257 | 261 | (2)% | 276 | 232 | 19% |
| Research and development expenses | 55 | 55 | - | 64 | 54 | 19% |
| Other expenses | 84 | 90 | (7)% | 57 | 256 | (78)% |
| Other income | (859) | (109) | 688% | (63) | (20) | 215% |
| Operating income | 1,519 | 629 | 141% | 1,210 | 202 | 499% |
| Finance expenses, net | 158 | 124 | 27% | 122 | 158 | (23)% |
| Share in earnings of equity-accounted investees | 3 | - | 4 | 5 | (20)% | |
| Income before income taxes | 1,364 | 505 | 170% | |||
| Provision for income taxes | 129 | 158 | (18)% | |||
| Income before taxes on income | 1,092 | 49 | 2129% | |||
| Taxes on income | 260 | 25 | 940% | |||
| Net income | 1,235 | 347 | 256% | 832 | 24 | 3367% |
| Net income attributable to the shareholders of the Company | 1,240 | 364 | 241% | 783 | 11 | 7018% |
| Earnings per share attributable to the shareholders of the Company: | ||||||
| Basic earnings per share (in dollars) | 0.97 | 0.29 | 235% | 0.61 | 0.01 | 6000% |
| Diluted earnings per share (in dollars) | 0.97 | 0.29 | 235% | 0.60 | 0.01 | 5900% |
Results of operations for the year 20182021
| YTD 2017 figures | 5,418 | (4,789) | 629 | |
| Total adjustments YTD 2017 * | - | 23 | 23 | |
| Adjusted YTD 2017 figures | 5,418 | (4,766) | 652 | |
| Divested businesses 2017 | (343) | 221 | (122) | |
| Adjusted YTD 2017 figures (excluding divested businesses) | 5,075 | (4,545) | 530 | |
| Quantity | (87) | 77 | (10) |  |
| Price | 419 | - | 419 |  |
| Exchange rate | 99 | (93) | 6 | |
| Raw materials | - | (88) | (88) | |
| Energy | - | (2) | (2) | |
| Transportation | - | (41) | (41) | |
| Operating and other expenses | - | (64) | (64) | |
| Adjusted YTD 2018 figures (excluding divested businesses) | 5,506 | (4,756) | 750 | |
| Divested businesses 2018 | 50 | (47) | 3 | |
| Adjusted YTD 2018 figures | 5,556 | (4,803) | 753 | |
| Total adjustments YTD 2018 * | - | 766 | 766 | |
| YTD 2018 figures | 5,556 | (4,037) | 1,519 |
| Year Ended December 31, | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
| Europe | 1,970 | 1,918 |
| Asia | 1,488 | 1,342 |
| North America | 978 | 1,175 |
| South America | 712 | 666 |
| Rest of the world | 408 | 317 |
| Total | 5,556 | 5,418 |
| 2018 | 2017 | |
| $ millions | $ millions |
| Total Sales | 1,296 | 1,193 |
| Sales to external customers | 1,281 | 1,179 |
| Sales to internal customers | 15 | 14 |
| Segment profit | 350 | 303 |
| Depreciation and Amortization | 63 | 61 |
| Capital expenditures | 50 | 49 |
| Year Ended December 31, | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
| Europe | 473 | 456 |
| Asia | 399 | 351 |
| North America | 347 | 327 |
| South America | 21 | 18 |
| Rest of the world | 41 | 27 |
| Total | 1,281 | 1,179 |
| YTD 2017 figures | 1,193 | (890) | 303 | |
| Quantity | 22 | (19) | 3 | |
| Price | 70 | - | 70 | |
| Exchange rate | 11 | (11) | - |  |
| Raw materials | - | (13) | (13) | |
| Energy | - | (2) | (2) | |
| Transportation | - | 1 | 1 | |
| Operating and other expenses | - | (12) | (12) | |
| YTD 2018 figures | 1,296 | (946) | 350 |
| 2018 | 2017 | |
| $ millions | $ millions |
| Total sales | 1,623 | 1,383 |
| Potash sales to external customers | 1,280 | 1,119 |
| Potash sales to internal customers | 79 | 71 |
| Other and eliminations* | 264 | 193 |
| Gross profit | 696 | 539 |
| Segment profit | 393 | 282 |
| Depreciation and Amortization | 141 | 128 |
| Capital expenditures | 356 | 270 |
| Average realized price (in $)** | 278 | 236 |
| Year Ended December 31, | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
| Asia | 518 | 432 |
| South America | 406 | 347 |
| Europe | 396 | 327 |
| North America | 107 | 116 |
| Rest of the world | 54 | 36 |
| Total | 1,481 | 1,258 |
| YTD 2017 figures | 1,383 | (1,101) | 282 | |
| Quantity | 21 | (25) | (4) | |
| Price | 197 | - | 197 | |
| Exchange rate | 22 | (27) | (5) | |
| Energy | - | (3) | (3) | |
| Transportation | - | (32) | (32) | |
| Operating and other expenses | - | (42) | (42) | |
| YTD 2018 figures | 1,623 | (1,230) | 393 |
| Production | 4,880 | 4,773 |
| Total sales (including internal sales) | 4,895 | 5,039 |
| Closing inventory | 385 | 400 |
| 2018 | 2017 | |
| $ millions | $ millions |
| Total Sales | 2,099 | 2,037 |
| Sales to external customers | 2,001 | 1,938 |
| Sales to internal customers | 98 | 99 |
| Segment profit | 208 | 149 |
| Depreciation and Amortization | 172 | 172 |
| Capital expenditures | 180 | 154 |
| Year Ended December 31, | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
| Europe | 696 | 730 |
| Asia | 465 | 457 |
| North America | 405 | 368 |
| South America | 264 | 274 |
| Rest of the world | 171 | 109 |
| Total | 2,001 | 1,938 |
| YTD 2017 figures | 2,037 | (1,888) | 149 | |
| Divested businesses 2017 | (32) | 36 | 4 | |
| YTD 2017 figures (excluding divested businesses) | 2,005 | (1,852) | 153 | |
| Quantity | (108) | 98 | (10) | |
| Price | 142 | - | 142 | |
| Exchange rate | 44 | (33) | 11 | |
| Raw materials | - | (62) | (62) | |
| Energy | - | 1 | 1 | |
| Transportation | - | (10) | (10) | |
| Operating and other expenses | - | (14) | (14) | |
| YTD 2018 figures (excluding divested businesses) | 2,083 | (1,872) | 211 | |
| Divested businesses 2018 | 16 | (19) | (3) | |
| YTD 2018 figures | 2,099 | (1,891) | 208 |
| Phosphate rock | ||
| Production | 5,006 | 4,877 |
| Green phosphoric acid | ||
| Used for production of phosphate commodities | 552 | 451 |
| Used for production of phosphate specialties | 305 | 281 |
| Other | 17 | 28 |
| Phosphate fertilizers | ||
| Production | 2,304 | 2,094 |
| Sales* | 2,269 | 2,291 |
| Pure phosphoric acid | ||
| Production | 289 | 275 |
| 2018 | 2017 | |
| $ millions | $ millions |
| Total Sales | 741 | 692 |
| Sales to external customers | 719 | 671 |
| Sales to internal customers | 22 | 21 |
| Segment profit | 57 | 56 |
| Depreciation and Amortization | 19 | 19 |
| Capital expenditures | 15 | 12 |
| Year Ended December 31, | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
| Europe | 359 | 324 |
| Asia | 105 | 99 |
| North America | 97 | 87 |
| South America | 21 | 22 |
| Rest of the world | 137 | 139 |
| Total | 719 | 671 |
| YTD 2017 figures | 692 | (636) | 56 | |
| Quantity | 17 | (13) | 4 | |
| Price | 13 | - | 13 | |
| Exchange rate | 19 | (17) | 2 | |
| Raw materials | - | (14) | (14) | |
| Energy | - | - | - | |
| Transportation | - | - | - | |
| Operating and other expenses | - | (4) | (4) | |
| YTD 2018 figures | 741 | (684) | 57 |
| For the Years Ended December 31, | % Increase (Decrease) | ||
| 2017 | 2016 | ||
| $ millions | $ millions | sales | |
| Sales | 5,418 | 5,363 | 1% |
| Cost of sales | 3,746 | 3,703 | 1% |
| Gross profit | 1,672 | 1,660 | 1% |
| Selling, transport and marketing expenses | 746 | 722 | 3% |
| General and administrative expenses | 261 | 321 | (19)% |
| Research and development expenses | 55 | 73 | (25)% |
| Other expenses | 90 | 618 | (85)% |
| Other income | (109) | (71) | 54% |
| Operating income (loss) | 629 | (3) | - |
| Finance expenses, net | 124 | 132 | (6)% |
| Share in earnings of equity-accounted investees | - | 18 | - |
| Income (loss) before income taxes | 505 | (117) | - |
| Provision for income taxes | 158 | 55 | 187% |
| Net income (loss) | 347 | (172) | - |
| Net income (loss) attributable to the shareholders of the Company | 364 | (122) | - |
| Earnings (losses) per share attributable to the shareholders of the Company: | |||
| Basic earnings (losses) per share (in dollars) | 0.29 | (0.10) | - |
| Diluted earnings (losses) per share (in dollars) | 0.29 | (0.10) | - |
| YTD 2016 figures | 5,363 | (5,366) | (3) | |
| Total adjustments YTD 2016* | - | 585 | 585 | |
| Adjusted YTD 2016 figures | 5,363 | (4,781) | 582 | |
| Quantity | 52 | (1) | 51 | |
| Price | (6) | - | (6) | |
| Exchange rate | 9 | (56) | (47) | |
| Raw materials | - | 25 | 25 | |
| Energy | - | (21) | (21) | |
| Transportation | - | (12) | (12) | |
| Operating and other expenses | - | 80 | 80 | |
| Adjusted YTD 2017 figures | 5,418 | (4,766) | 652 | |
| Total adjustments YTD 2017* | - | (23) | (23) | |
| YTD 2017 figures | 5,418 | (4,789) | 629 |
| Year Ended December 31, | ||
| 2017 | 2016 | |
| $ millions | $ millions | |
| Europe | 1,918 | 1,863 |
| Asia | 1,342 | 1,275 |
| North America | 1,175 | 1,141 |
| South America | 666 | 588 |
| Rest of the world | 317 | 496 |
| Total | 5,418 | 5,363 |
| 2017 | 2016 | |
| $ millions | $ millions |
| Total Sales | 1,193 | 1,120 |
| Sales to external customers | 1,179 | 1,111 |
| Sales to internal customers | 14 | 9 |
| Segment profit | 303 | 286 |
| Depreciation and Amortization | 61 | 52 |
| Capital expenditures | 49 | 38 |
| Year Ended December 31, | ||
| 2017 | 2016 | |
| $ millions | $ millions | |
| Europe | 456 | 424 |
| Asia | 351 | 301 |
| North America | 327 | 330 |
| South America | 18 | 24 |
| Rest of the world | 27 | 32 |
| Total | 1,179 | 1,111 |
| YTD 2016 figures | 1,120 | (834) | 286 | |
| Quantity | 57 | (21) | 36 | |
| Price | 12 | - | 12 | |
| Exchange rate | 4 | (16) | (12) | |
| Raw materials | (1) | (1) | | |
| Energy | (2) | (2) | | |
| Transportation | (1) | (1) | | |
| Operating and other expenses | (15) | (15) | | |
| YTD 2017 figures | 1,193 | (890) | 303 |
| 2017 | 2016 | |
| $ millions | $ millions |
| Total sales | 1,383 | 1,338 |
| Potash sales to external customers | 1,119 | 1,085 |
| Potash sales to internal customers | 71 | 80 |
| Other and eliminations* | 193 | 173 |
| Gross profit | 539 | 499 |
| Segment profit | 282 | 282 |
| Depreciation and Amortization | 128 | 127 |
| Capital expenditures | 270 | 311 |
| Average realized price (in $)** | 236 | 226 |
| Year Ended December 31, | ||
| 2017 | 2016 | |
| $ millions | $ millions | |
| Asia | 432 | 395 |
| South America | 347 | 267 |
| Europe | 327 | 354 |
| North America | 116 | 93 |
| Rest of the world | 36 | 104 |
| Total | 1,258 | 1,213 |
| YTD 2016 figures | 1,338 | (1,056) | 282 | |
| Quantity | 1 | 9 | 10 | |
| Price | 41 | - | 41 | |
| Exchange rate | 3 | (14) | (11) | |
| Energy | (11) | (11) | | |
| Transportation | (28) | (28) | | |
| Operating and other expenses | (1) | (1) | | |
| YTD 2017 figures | 1,383 | (1,101) | 282 |
| Production | 4,773 | 5,279 |
| Total sales (including internal sales) | 5,039 | 5,165 |
| Closing inventory | 400 | 666 |
| 2017 | 2016 | |
| $ millions | $ millions |
| Total Sales | 2,037 | 2,186 |
| Sales to external customers | 1,938 | 2,082 |
| Sales to internal customers | 99 | 104 |
| Segment profit | 149 | 224 |
| Depreciation and Amortization | 172 | 203 |
| Capital expenditures | 154 | 237 |
| Year Ended December 31, | ||
| 2017 | 2016 | |
| $ millions | $ millions | |
| Europe | 730 | 697 |
| Asia | 457 | 501 |
| North America | 368 | 379 |
| South America | 274 | 276 |
| Rest of the world | 109 | 229 |
| Total | 1,938 | 2,082 |
| Sales | Expenses | Operating income | ||
| $ millions | ||||
| YTD 2016 figures | 2,186 | (1,962) | 224 | |
| Quantity | (109) | 73 | (36) | |
| Price | (46) | - | (46) | |
| Exchange rate | 6 | (33) | (27) | |
| Raw materials | 15 | 15 | | |
| Energy | (8) | (8) | | |
| Transportation | 16 | 16 | | |
| Operating and other expenses | 11 | 11 | | |
| YTD 2017 figures | 2,037 | (1,888) | 149 |
| YTD 2020 figures | 5,043 | (4,841) | 202 | |
| Total adjustments YTD 2020* | - | 307 | 307 | |
| Adjusted YTD 2020 figures | 5,043 | (4,534) | 509 | |
| New Brazilian Businesses' contribution | 341 | (290) | 51 |  |
| Quantity | 353 | (243) | 110 | |
| Price | 1,081 | - | 1,081 | |
| Exchange rates | 137 | (191) | (54) |  |
| Raw materials | - | (246) | (246) | |
| Energy | - | (27) | (27) | |
| Transportation | - | (154) | (154) | |
| Operating and other expenses | - | (76) | (76) | |
| Adjusted YTD 2021 figures | 6,955 | (5,761) | 1,194 | |
| Total adjustments YTD 2021* | - | 16 | 16 | |
| YTD 2021 figures | 6,955 | (5,745) | 1,210 |
* See "Adjustments to reported operating and dairy proteins quantities sold. This negative impact was partly offset by an increase in phosphate-based acids quantities sold.net income (non-GAAP)" above.
| - | Sales – The Company's sales increased by $1,912 million compared to 2020. The increase was primarily related to a $278 increase in the average realized price per ton of potash year-over-year, as well as an increase in the selling prices of phosphate fertilizers, acids, bromine and |
| - | Cost of sales – Cost of sales increased by $791 million compared to 2020. The increase was primarily related to higher prices of sulphur consumed during the period, raw materials used in the production of bromine- and phosphorus-based flame retardants, commodity fertilizers and ammonia. In addition, an increase of $225 million was derived from the acquisitions of Fertiláqua and ADS, as well as an increase of $185 million in sales volumes of bromine-based flame retardants, Innovative ag solutions products, bromine-based industrial solutions, mainly clear brine fluids FertilizerpluS products, phosphate specialties business and specialty minerals. Another contribution to the increase was due to |
ICL Group Limited 177
| - | Selling and marketing – Selling and marketing expenses increased by $301 million compared to 2020, mainly due to higher transportation costs, higher sales volumes, the acquisitions of |
| Phosphate rock | ||
| Production | 4,877 | 5,744 |
| Green phosphoric acid | ||
| Used for production of phosphate commodities | 451 | 645 |
| Used for production of phosphate specialties | 281 | 261 |
| Other | 28 | 28 |
| Phosphate fertilizers | ||
| Production | 2,094 | 2,725 |
| Sales* | 2,291 | 2,645 |
| Pure phosphoric acid | ||
| Production | 275 | 266 |
| - | General and administrative – General and administrative expenses increased by $44 million compared to 2020, mainly due to higher labor costs, the appreciation of the average exchange rate of the Israeli shekel and the euro against the dollar and the acquisitions of Fertiláqua and ADS. |
| - | Research and Development – Research and development expenses increased by $10 million compared to 2020, mainly due to higher labor costs. |
| - | Other expenses, net – Other expenses, net, decreased by $242 million compared to 2020. The decrease was primarily due to higher expenses in 2020 related to impairment of assets, early retirement of employees, site closure and restoration costs (see ‘Adjustments to reported operating and net income – non-GAAP financial measures’ above). |
| 2017 | 2016 | |
| $ millions | $ millions |
| Total Sales | 692 | 661 |
| Sales to external customers | 671 | 632 |
| Sales to internal customers | 21 | 29 |
| Segment profit | 56 | 55 |
| Depreciation and Amortization | 19 | 17 |
| Capital expenditures | 12 | 7 |
Below is a geographical breakdown of our sales to external customers, by customer location:
| Year Ended December 31, | ||
| 2021 | 2020 | |
| $ millions | $ millions | |
| Europe | 2,159 | 1,822 |
| Asia | 1,876 | 1,432 |
| North America | 1,186 | 859 |
| South America | 1,305 | 517 |
| Rest of the world | 429 | 413 |
| Total | 6,955 | 5,043 |
| Year Ended December 31, | ||
| 2017 | 2016 | |
| $ millions | $ millions | |
| - | Europe – The increase in sales was primarily related to an increase in sales volumes and selling prices of Innovative ag solutions products, bromine and phosphorus-based flame retardants, phosphate salts and white phosphoric acid (WPA), as well as a higher selling prices of phosphate fertilizers and potash. The increase was partly offset by a decrease in sales volumes of potash, phosphate fertilizers and clear brine fluids. |
| - | Asia – The increase in sales was primarily related to an increase in sales volumes and selling prices of bromine-based flame retardants, bromine industrial solutions products, Innovative Ag Solutions segment products and phosphate salts, as well as an increase in the selling prices of potash, phosphate fertilizers and acids. The increase in sales was also supported by an increase in sales volumes of clear brine fluids and the positive impact of the appreciation of the average exchange rate of the Chinese yuan against the dollar. The increase was partly offset by a decrease in sales volumes of potash, phosphate fertilizers and acids. |
| - | North America – The increase in sales was primarily related to an increase in sales volumes and selling prices of potash, phosphate fertilizers, bromine and phosphorus-based flame retardants, especially minerals products, phosphate-based food additives and Innovative ag solutions products. |
| Europe | 324 | 314 |
| Asia | 99 | 72 |
| North America | 87 | 100 |
| South America | 22 | 19 |
| Rest of the world | 139 | 127 |
| Total | 671 | 632 |
ICL Group Limited 178
| - | South America – The increase in sales was primarily related to an increase in sales volumes and selling prices of specialty agriculture products, which include sales from our acquired Fertiláqua and ADS business, potash, phosphate fertilizers and white phosphoric acid (WPA), as well as an increase in sales volumes of clear brine fluids. The increase was partly offset by a decrease in selling prices of clear brine fluids. |
| - | Rest of the world – The increase in sales was primarily related to higher sales volumes and selling prices of specialty fertilizers products and higher selling prices of specialty minerals products. |
Financing expenses, net
Net financing expenses in the year ended December 31, 2021, amounted to $122 million, compared to $158 million in the corresponding year, a decrease of $36 million. This decrease derived mainly from changes in hedging transactions results in the amount of $39 million.
Tax expenses
The tax expenses for the year ended December 31, 2021, amounted to $260 million compared to $25 million for the year ended December 31, 2020, reflecting an effective tax rate of about 24% and 51%, respectively. The relatively high effective tax rate in previous year was mainly due to the recognition of deferred tax on significant impairment losses and provisions at a beneficiary tax rate.
ICL Group Limited 179
Segment Information
Segment revenue, expenses and results include inter-segment transfers which are based on transaction prices in the ordinary course of business. These are aligned with reports that are regularly reviewed by the Chief Operating Decision Maker. Inter-segment transfers are eliminated as part of the financial statements' consolidation process.
Results of operations for the year 2021 – Industrial Products segment
| 2021 | 2020 | |
| $ millions | $ millions |
Segment Sales | 1,617 | 1,255 |
Sales to external customers | 1,601 | 1,242 |
Sales to internal customers | 16 | 13 |
Segment Operating Income | 435 | 303 |
Depreciation and amortization | 65 | 77 |
Capital expenditures | 74 | 84 |
Below is a geographical breakdown of our sales to external customers, by customer location:
| Year Ended December 31, | ||
| 2021 | 2020 | |
| $ millions | $ millions | |
Europe | 529 | 458 |
Asia | 597 | 405 |
North America | 360 | 296 |
South America | 62 | 40 |
Rest of the world | 53 | 43 |
Total | 1,601 | 1,242 |
ICL Group Limited 180
| Sales | Expenses | Operating income | ||
$ millions | ||||
YTD 2020 figures | 1,255 | (952) | 303 | |
Quantity | 198 | (104) | 94 | |
Price | 150 | - | 150 | |
Exchange rates | 14 | (26) | (12) | |
Raw materials | - | (57) | (57) | |
Energy | - | 2 | 2 | |
Transportation | - | (22) | (22) | |
Operating and other expenses | - | (23) | (23) | |
YTD 2021 figures | 1,617 | (1,182) | 435 |
| - | Quantity – The positive impact on the segment’s operating income was primarily due to higher sales volumes of bromine- and phosphorus-based flame retardants, as well as bromine-and phosphorus industrial solutions and specialty minerals products. |
| - | Price – The positive impact on the segment’s operating income was primarily related to the record level of elemental bromine prices in China and higher selling prices of bromine- and phosphorus-based flame retardants, as well as specialty minerals products. |
| - | Exchange rates – The unfavorable impact on the segment’s operating income resulted primarily from the appreciation of the average exchange rate of the Israeli shekel against the US dollar, which increased operational costs. This was partly offset by the appreciation of the average exchange rate of the euro against the US dollar. |
| - | Raw materials –The negative impact on the segment’s operating income was primarily related to higher prices of raw materials used in the production of bromine- and phosphorus-based flame retardants. |
| - | Transportation - The negative impact on the segment’s operating income was primarily related to higher marine transportation costs. |
| - | Operating and other expenses – The negative impact on operating income was primarily related to higher operational costs and royalties, due to higher revenue. |
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Results of operations for the year 2021 - Potash segment
| 2021 | 2020 | |
| $ millions | $ millions |
| Segment Sales | 1,931 | 1,346 |
| Potash sales to external customers | 1,401 | 979 |
| Potash sales to internal customers | 94 | 95 |
| Other and eliminations (1) | 436 | 272 |
| Gross Profit | 894 | 472 |
| Segment Operating Income | 399 | 120 |
| Depreciation and amortization* | 165 | 166 |
| Capital expenditures | 298 | 296 |
| Average realized price (in $) (2) | 337 | 230 |
| (1) | Mainly includes polysulphate produced in UK, salt produced in underground mines in the UK and Spain, magnesium-based products and sales of electricity produced in Israel. |
| (2) | Potash average realized price (dollar per ton) is calculated by dividing total Potash revenue by total sales’ quantities. The difference between FOB price and average realized price is mainly marine transportation costs. |
Below is a geographical breakdown of our sales to external customers, by customer location:
| Year Ended December 31, | ||
| 2021 | 2020 | |
| $ millions | $ millions | |
| Asia | 511 | 431 |
| Europe | 442 | 354 |
| South America | 506 | 230 |
| North America | 216 | 86 |
| Rest of the world | 93 | 82 |
| Total | 1,768 | 1,183 |
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| Sales | Expenses | Operating income | ||
| $ millions | ||||
| YTD 2020 figures | 1,346 | (1,226) | 120 | |
| Quantity | 72 | (85) | (13) | |
| Price | 496 | - | 496 | |
| Exchange rates | 17 | (48) | (31) | |
| Energy | - | (30) | (30) | |
| Transportation | - | (97) | (97) | |
| Operating and other expenses | - | (46) | (46) | |
| YTD 2021 figures | 1,931 | (1,532) | 399 |
| - | Quantity – The negative impact on the segment’s operating income was primarily related to a decrease in sales volumes of potash from both ICL Dead Sea and ICL Iberia. |
| - | Price – The positive impact on the segment’s operating income was primarily related to an increase of $278 in the average realized price per ton of potash year-over-year, as well as an increase in the selling prices of FertilizerpluS products. |
| - | Exchange rates – The unfavorable impact on the segment’s operating income related primarily to the appreciation of the average exchange rate of the Israeli shekel and the British pound against the US dollar, which led to a negative effect on operating income. This was accompanied by the appreciation of the average exchange rate of the euro against the US dollar, which contributed to sales as much as it increased operational costs. |
| - | Energy - The negative impact on the segment’s operating income was primarily due to an increase in electricity prices, mainly in Europe. |
| - | Transportation – The negative impact on the segment’s operating income was primarily related to an increase in marine transportation costs. |
| - | Operating and other expenses – The negative impact on the segment’s operating income was primarily related to a higher operational cost, as well as higher payments of royalties due to the increase in potash prices. |
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Potash – Production and Sales
| Thousands of Tons | 2021 | 2020 |
| Production | 4,514 | 4,527 |
| Total sales (including internal sales) | 4,434 | 4,666 |
| Closing inventory | 355 | 275 |
| - | Production – In 2021, potash production was 13 thousand ton lower than the corresponding year, mainly due to a planned shutdown of more than one week at ICL Dead Sea during the first quarter of 2021. |
| - | Sales – The quantity of potash sold in 2021 was 232 thousand tons lower year-over-year, as significantly higher sales to the US, Brazil, Vietnam and Taiwan were offset by lower sales to China and India. |
Results of operations for the year 2021 – Phosphate Solutions segment
| 2021 | 2020 | |
| $ millions | $ millions |
| Segment Sales | 2,432 | 1,948 |
| Sales to external customers | 2,334 | 1,871 |
| Sales to internal customers | 98 | 77 |
| Segment Operating Income | 307 | 66 |
| Depreciation and amortization* | 215 | 210 |
| Capital expenditures | 238 | 275 |
Below is a geographical breakdown of our sales to external customers, by customer location:
| Year Ended December 31, | ||
| 2021 | 2020 | |
| $ millions | $ millions | |
| Europe | 748 | 651 |
| Asia | 610 | 468 |
| North America | 491 | 371 |
| South America | 358 | 227 |
| Rest of the world | 127 | 154 |
| Total | 2,334 | 1,871 |
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Sales | Expenses | Operating income | ||
$ millions | ||||
| YTD 2016 figures | 661 | (606) | 55 | |
| Quantity | 46 | (39) | 7 | |
| Price | (12) | - | (12) | |
| Exchange rate | (3) | 1 | (2) | |
| Raw materials | 12 | 12 | | |
| Energy | - | - | | |
| Transportation | - | - | | |
| Operating and other expenses | (4) | (4) | | |
| YTD 2017 figures | 692 | (636) | 56 |
| YTD 2020 figures | 1,948 | (1,882) | 66 | |
| Quantity | 35 | (2) | 33 | |
| Price | 384 | - | 384 | |
| Exchange rates | 65 | (71) | (6) | |
| Raw materials | - | (159) | (159) | |
| Energy | - | (1) | (1) | |
| Transportation | - | (32) | (32) | |
| Operating and other expenses | - | 22 | 22 | |
| YTD 2021 figures | 2,432 | (2,125) | 307 |
| - | Quantity – The positive impact on the segment's operating income was primarily related to an increase in the sales volumes of acids in all regions, salts and phosphate-based food additive. This trend was partly offset by a decrease in sales volumes of phosphate fertilizers. |
| - | Price – The positive impact on the segment's operating income was primarily related to an increase in the selling prices of phosphate fertilizers and acids, as well as higher selling prices in the phosphate specialties business. |
| - | Exchange rates – The unfavorable impact on the segment’s operating income was primarily related to the appreciation of the average exchange rate of the Israeli shekel against the dollar, which increased operational costs. This was partly offset by the depreciation of the average exchange rate of the euro against the dollar which contributed to the operating income. |
| - | Raw materials – The negative impact on the segment’s operating income was due to higher prices of sulphur consumed during the period. |
| - | Transportation – The negative impact on the segment’s operating income was primarily related to an increase in marine and inland transportation costs. |
| - | Operating and other expenses – The positive impact on operating income was primarily related to lower operational costs. |
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Results of operations for the year 2021 – the positive impact on the segment's profit derives mainly from an increase in the quantities sold of specialty agriculture products.Innovative Ag Solutions segment
| 2021 | 2020 | |
| $ millions | $ millions |
| Segment Sales | 1,245 | 731 |
| Sales to external customers | 1,226 | 715 |
| Sales to internal customers | 19 | 16 |
| Segment Operating Income | 121 | 40 |
| Depreciation and amortization | 38 | 25 |
| Capital expenditures | 36 | 20 |
| Year Ended December 31, | ||
| 2021 | 2020 | |
| $ millions | $ millions | |
| Europe | 421 | 332 |
| Asia | 156 | 126 |
| North America | 117 | 103 |
| South America | 378 | 21 |
| Rest of the world | 154 | 133 |
| Total | 1,226 | 715 |
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Sales | Expenses | Operating income | ||
$ millions | ||||
| YTD 2020 figures | 731 | (691) | 40 | |
| New Brazilian Businesses' contribution | 341 | (290) | 51 | |
| Quantity | 71 | (52) | 19 | |
| Price | 60 | - | 60 | |
| Exchange rates | 42 | (38) | 4 | |
| Raw materials | - | (39) | (39) | |
| Energy | - | 1 | 1 | |
| Transportation | - | (2) | (2) | |
| Operating and other expenses | - | (13) | (13) | |
| YTD 2021 figures | 1,245 | (1,124) | 121 |
| - | New Brazilian businesses' contribution - In January 2021, the Company completed the acquisition of Fertiláqua and in July 2021, the acquisition of ADS. |
| - | Quantity – The positive impact on the segment's operating income was due to strong sales volumes in most regions and business lines, primarily in specialty agriculture and turf and ornamental products. |
| - | Price – The positive impact on the segment's operating income was due to higher sales prices in most business lines, especially in specialty agriculture and turf and ornamental products. |
| - | Exchange rate – The favorable impact on the segment’s operating income was primarily related to the appreciation of the average exchange rate of the euro against the dollar, which contributed to the segment's revenue. The appreciation in the average exchange rate of the Israeli shekel against the dollar offset each other and had no impact on the segment's operating income. |
| - | Raw materials – The negative impact on the segment's operating income was primarily related to higher costs of commodity fertilizers and ammonia. |
| - | Operating and other expenses – The negative impact on operating income was primarily related to higher operational costs, mainly selling and marketing costs. |
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B. LIQUIDITY AND CAPITAL RESOURCES
Overview
As atof December 31, 2018,2021, ICL had a balance of $213$564 million in cash, cash equivalents, short-term investments and deposits. As at December 31, 2018,In addition, the Company'sCompany has unutilized long‑term credit facilities of $1,030 million and a securitization agreement in the amount of $300 million, of which the Company has utilized approximately $180 million of the facility’s framework
Furthermore, our net financial liabilities were $2,212$2,449 million, including $1,815$2,436 million of long‑term debt (excluding current maturities) and debentures, and $610 million of short‑term debt of$577 million (including current maturities of long‑term debt). The long-term debt consists of debentures of $1,708 million together with loans from financial institutions and lease liabilities of $728 million, while the short‑term debt consists of short-term loans from financial institutions and lease liabilities of $327 million and current maturities of debentures and loans of $250 million. For more information about the currencies in which the Company's liabilities are denominated and their interest rates, see Note 13 to our Audited Financial Statements.
Distributions of dividends to ICL from its subsidiaries and transfers of funds through certain countries may under certain circumstances result in the creation of tax liabilities. However, taxation on dividend distributions and funds transfers have not had, and are not expected to have, a material impact on the Company'sour ability to meet itsour cash obligations.
As of December 31, 2021, we had no material off-balance sheet arrangements, other than the amounts described in Notes 10 and 18A to our Audited Financial Statements.
The Company’s primary contractual obligations consist of commitments to purchase raw materials and energy in the ordinary course as well as agreements to secure its gas supply needs. For information about the Company's contractual obligations, see Note 18 to our Audited Financial Statements.
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Credit Facilities
In additionJanuary 2021, ICL completed the acquisition of Fertiláqua for a consideration of $131 million, including net debt of $43 million.
Subsequently, in March 2021, we signed a framework credit facility agreement with MUFG Bank for a period of two years, according to its operating expenses and dividend distributions, in 2018which the Company continued several major capital expenditure projects, such as the salt harvesting project, raising the coastal dykes in the evaporation ponds, investment in the new power station in Sodom, construction of a new pumping station in the Northern Basincan withdraw up to BRL 230 million (about $42 million). As of the Dead Sea and constructiondate of phosphogypsum ponds in ICL Rotem. Additional major capital expenditures scheduled to run over the coming years are investments in the YPH joint venture in China along with further investment in Spain. On the other hand, as part of its strategy of divesting low synergy businesses, in December 2017,this Report, the Company completed salehas withdrawn BRL 180 million (about $33 million), with a maturity date of its holdings in IDE Technologies Ltd., for net proceeds of $168 million. March 2023.
In addition, on March 2018, the CompanyJuly 2021, we completed the sale transactionacquisition of the Fire Safety and Oil Additives businesses,South American plant nutrition business of ADS for a total consideration of $1,010about $443 million, including net debt of about $104 million.
In September 2020, the Company entered into a new securitization agreement with three international banks for a committed amount of $300 million and an additional uncommitted amount of $100 million, maturing in September 2025. The securitization agreement replaces a previous one in the amount of $350 million which matured in September 2020. The new agreement includes similar terms as the previous agreement. As of December 31, 2021, ICL utilized approximately $180 million of which $953the facility’s framework.
In October 2021, an additional bank joined the credit facility agreement, increasing the revolving credit facility by an additional $100 million, leading to an aggregate $1.2 billion. Most banks signed on to continue the credit facility agreement, and from March 2023 to March 2025, the total credit facility will amount to $1 billion. For further information see Note 13 to the Company's Annual Financial Statements. As of December 31, 2021, ICL utilized approximately $170 million of the facility’s framework.
Debentures
In January 2021, we repaid $84 million of a private placement bond as scheduled. In March 2021, the Company repaid NIS 392 million (approx. $118 million) Series E Bond, out of the total NIS 1,569 million (approx. $487 million), as scheduled. In December 2021, the Company repaid an amount of $ 69.4 million loan from a European bank, in accordance with the agreement.
In September 2021, we executed a new €250 million sustainability linked loan ("SLL") agreement, with a five-year term through 2026 and a fixed annual interest rate of 0.8%. The loan is an innovative step forward in cashour ongoing sustainability efforts and $57includes three sustainability performance targets. These targets were designed to align with ICL’s sustainability strategy and goals, and each will be assessed at specific times during the term of the loan by third party certification. As part of this effort, ICL is targeting an annual 4% to 5% reduction in direct and indirect Scope 1 and Scope 2 CO₂e emissions resulting from ICL global operations. As of the 2021 fiscal year, third-party monitoring will commence in accordance with accounting and reporting standards published by the GHG Protocol. The Company is also planning to expand its participation in the formTogether for Sustainability (TfS) global initiative that is dedicated to developing and implementing a global supplier engagement program that assesses and improves sustainability sourcing practices. Through 2025, the Company is committed to add, each year, a significant number of a long-term loanTfS qualified vendors who meet certain criteria in the areas of management, environment, health and safety, labor and human rights, ethics, and governance. In addition, ICL will continue to a subsidiaryfocus on inclusion, equality and expanding the representation of women among its senior management, executive and Board of Director roles. ICL has worked to increase the number of women in senior management, and this segment has already grown from 9% in 2018 to 19% in 2021. As part of the buyer. For additional information on divestitures currently in progress, see “Item 3 - Key Information— A. Selected Financial Data”.SLL, the Company has set a target for women to hold at least 25% of senior management roles by the end of 2024.
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Ratings and financial covenants
S&P
On May 29, 2018,June 23, 2021, the Company completed a cash tender offer for anyS&P credit rating agency reaffirmed the Company’s international credit rating and all its debentures Series D, senior notes due in 2024 with a coupon of 4.5%. Following the tender offer, the Company repurchased an amount of $616 million out of the original principal of $800 million. On October 31, 2018, ICL's Board of Directors authorized the Company to repurchase from time to time up to an additional $80 million of the Company's series D debentures due in 2024, which following the completion of the tender offer for the series D debentures on May 29, 2018, amount to $184 million, pursuant for one or more privately negotiated transactions, at a price which shall not exceed the market price of each such repurchase.
On October 29, 2018,June 21, 2021, Fitch Ratings reaffirmed our long-term issuer default rating and senior unsecured rating at 'BBB-'. The outlook on the Company entered into an agreement according to which, its commitment under certain revolving credit facility agreements were reduced by a total aggregate amount of $655 million, to an amount of $1.2 billion (hereinafter – the agreement). In accordance with the agreement, the maturity date of the $1.2 billion revolving credit facility has been extended from March 2022 to March 2023, with two options for an extension (at the banks’ option) of an additional one year each, so that the final maturity date, if all options are consummated, will be March 2025. All the other material original terms of the revolving credit facility agreements were maintained. The agreement entered into effect in November 2018.
long-term issuer default rating is stable.
long-term issuer default rating is stable.
Financial Covenants
For a description of material financial covenants in the Company’s loan agreements and any potential risk relating to compliance with them, credit facilities, sale of receivables under securitization transaction and information on material loans and debentures outstanding as of December 31, 2021, see Note 13 to our Audited Financial Statements.
Sources and Uses of Cash
The following table sets forth our cash flowsflow for the periods indicated:
| Year Ended December 31, | ||
| 2021 | 2020 | |
| $ millions | $ millions | |
| Year Ended December 31, | |||
| 2018 | 2017 | 2016 | |
| $ millions | $ millions | $ millions | |
| Net cash provided by operating activities | 620 | 847 | 966 |
| Net cash provided by (used in) investing activities | 331 | (333) | (800) |
| Net cash used in financing activities | (894) | (511) | (239) |
| Net cash provided by operating activities | 1,065 | 804 |
| Net cash used in investing activities | (579) | (583) |
| Net cash used in financing activities | (244) | (105) |
Operating Activities
Investing Activities
Net cash used in investing activities in 2021 amounted to $579 million, compared with $583 million last year. In 2021, the amount includes net cash paid for business combination, which was offset by proceeds received from sellingthe divestment of YYTH shares and repayment of a loan to the buyer of the fire safety and oil additives businesses, in the amount of $283 million, compared with short-term credit received in the amount of $147 million last year.business.
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Net cash used in financing activities in 20172021 amounted to $511$244 million, compared with net cash provided by financing activities of $239$105 million in 2016. Thelast year. This increase in the net cash used by financing activities is mainly due to repayment of long term loans, net, in the amount of $421 million, compared with the amount of $87 million made in 2016, along with higher dividend payments to the Company’s shareholders, in the amount of $75 million compared with 2016. On the other hand, there was an increase in receipt of short-term credit from banks and others, net, in the amount of $133 million, compared with 2016.
| Issuer | European bank (1) | Group of twelve international banks (2) | European bank (3) |
| Date of the credit facility | March 2014 | March 2015 | December 2016 |
| Date of credit facility termination | March 2019 | March 2023 | May 2025 |
| The amount of the credit facility | USD 35 million Euro 100 million | USD 1,200 million | USD 100 million |
| Credit facility has been utilized | Euro 40 million | USD 200 million | USD 70 million |
| Interest rate | Up to 33% use of the credit: Libor/Euribor + 0.90%. From 33% to 66% use of the credit: Libor/Euribor + 1.15% 66% or more use of the credit: Libor/Euribor + 1.40% | Up to 33% use of the credit: Libor/Euribor + 0.70%. From 33% to 66% use of the credit: Libor/Euribor + 0.80% 66% or more use of the credit: Libor/Euribor + 0.95% | Libor + 0.45% + spread |
| Loan currency type | USD and Euro loans | USD and Euro loans | USD loans |
| Pledges and restrictions | Financial covenants - see Section D, a cross-default mechanism and a negative pledge. | Financial covenants - see Section D, a cross-default mechanism and a negative pledge. | Financial covenants - see Section D and a negative pledge. |
| Non-utilization fee | 0.32% | 0.21% | 0.30% |
| Instrument type | Loan date | Original principal (millions) | Currency | Carrying amount ($ millions) | Interest rate | Principal repayment date | Additional information |
| Loan-Israeli institutions | November 2013 | 300 | Israeli Shekel | 67 | 4.74% (1) | 2015-2024 (annual installment) | Partially prepaid |
| Debentures (private offering) – 3 series | January 2014 | 84 145 46 | U.S Dollar | 84 144 46 | 4.55% 5.16% 5.31% | January 2021 January 2024 January 2026 | |
| Loan-international institutions | July 2014 | 27 | Euro | 25 | 2.33% | 2019-2024 | Partially prepaid |
| Debentures - Series D | December 2014 | 800 | U.S Dollar | 182 | 4.50% | December 2024 | (2) |
| Loan - European Bank | December 2014 | 161 | Brazilian Real | 19 | CDI+1.35% | 2015-2021 (Semiannual installment) | |
| Debentures - Series E | April 2016 | 1,569 | Israeli Shekel | 416 | 2.45% | 2021- 2024 (annual installment) | |
| Loan - others | April - October, 2016 | 600 | Chinese Yuan Renminbi | 29 | 5.23% | 2019 | (3) |
| Loan - Asian Banks | June - October, 2018 | 600 | Chinese Yuan Renminbi | 87 | 4.79% - 5.44% | 2019 | |
| Loan - Asian Bank | April 2018 | 400 | Chinese Yuan Renminbi | 58 | CNH Hibor + 0.50% | 2019 | |
| Debentures - Series F | May 2018 | 600 | U.S Dollar | 596 | 6.38% | May 2038 | (4) |
| Loan - European Bank | December 2018 | 70 | U.S Dollar | 70 | Libor + 0.66% | December 2021 |
Principal Capital Expenditures and Divestitures
ICL had cash capital expenditures of $572 million, $457$611 million and $632 $626million for the years ended December 31, 2018, 20172021 and 2016,2020, respectively. The aboveThese capital expenditures comprise of investments in fixed and intangible assets.assets.
ICL’S principal capital expenditures since January 1, 2016over the last three years have consisted of work on the following main projects:
New pumping station (P-9)P-9 Pumping Station in Sodom.Due to the receding water level in the Northern basin of the Dead Sea, the water line is receding from the current pumping station and construction of a new pumping station is therefore necessary. The new P-9 pumping station will serve as the main brine intake station for pumping brine from the Dead Sea to the coastal transmission system. The project consists of a sea base for the pumps, a bridge to the shore, a shore base, delivery pipes and an open canal.The new P-9 pumping station commenced its operation in January 2022.
New alternative-protein fiber production facility. As part of ICL’s efforts to expand its global Food Specialties portfolio, focusing on the development of healthier and more sustainable food products, in December 2021, the Company launched its new 10,000-square-foot alternative-protein fiber production facility in St. Louis, USA. The new facility will produce, at full capacity, more than 15 million pounds of plant-based protein fibers to be used in the production of meat substitute products sold by food companies, food-service distributors, restaurants and grocery chains.
New white phosphoric acid (WPA) facility in YPH. In 2017,our subsidiary YPH in China, we are expanding production of specialty phosphate solutions, among other things, by the Board of Directors approved an investment in construction of the P-9 pumping station. In 2017a white phosphoric acid (WPA) facility, which commenced its operation in 2021. The new WPA facility will add up to 70 thousand tons of food grade acid production capacity, once fully ramped-up. The facility produces qualified commercial food-grade acid quantities and 2018, DSW signed agreements with several execution and infrastructure companies, in a total amount of $160 million (out of the total project cost of about $250 million), for construction of the P-9 Pumping Station. The P-9 Pumping Station is expected to commence its operation during the year 2020.strengthen our phosphate specialties operations and enable additional diversification into higher value-added products.
Salt harvesting in the Dead Sea. A project aiming to keepprovide a constantpermanent solution for raising the water level in Pond 5 that compliesand stabilizing of the water therein at a fixed level by harvesting of the salt from this pond and transferring it to the Northern Basin of the Dead Sea. According to the agreement with the Israeli regulatory requirements of 15.1m, through dredginggovernment, the salt settlement in the pondplanning and transporting it for submergence in the Dead Sea. ICL's share in the project's funding is 80%. In October 2017, ICL signed a 12-year agreement that the cost of which for ICL is $280 million, for execution of the first stageSalt Harvesting Project will be performed by DSW. The Company will bear 80% and the state of Israel will bear 20% of the costs of the Salt Harvesting Project. However, the State's share will not exceed NIS 1.4 billion. The salt harvesting project with Holland Shallow Seas Dredging Ltd., which includes, among others,dredger, as part of the construction of a special dredger that is designed to execute the salt harvesting. The dredger is expected to enter into service towardsSalt Harvesting Project, commenced operation at the end of 2019.2020.
Raising the coastal dikes of evaporation pond 5 at the Dead Sea. The objective of the project was to protect from structural damage to the foundations and the hotel buildings situated close to the water’s edge, to the settlement of Neve Zohar and to other infrastructure located along the western shoreline of the Pond. The project was implemented by the Government of Israel, through the Dead Sea Preservation Government Company Ltd., together with DSW (who financed 39.5% of the project's cost). The construction work with respect to the hotels' coastline was, the Dead Sea Preservation Government Company Ltd. is conducting elevation work in the intermediate area between the two hotel complexes. As the maximum height of the level of the solutions (15.1 meters) was reached at the end of 2021, from 2022 onwards, the solutions' volume in Pond 5 will be preserved by way of harvesting the salt as part of the Salt Harvesting Project.
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Consolidation of production sites and the ramp project in Spain. The Company consolidated its activities into one site by means of expanding the Suria production site and discontinuing the mining activity at Sallent. In 2018,addition, in 2021, we successfully completed the main capital investments (CAPEX) includedexcavation of the ramp connecting the Cabanasses mine with the Suria plant, including the installation of operational equipment and infrastructure, as well as an upgrade of the mine's surrounding logistics infrastructures. The consolidation of the potashfacilities and the ramp project are expected to increase our production capacity to an expected annual running rate of approximately 1 million tons by the second half of 2022, while lowering cost per ton.
New production capacity of TBBA in Spain (mine, logisticsNeot Hovav. In the face of growing demand for TBBA and port), constructionthe signing of several long-term strategic agreements, the Company is working to increase its production capacity. Accordingly, the Company has built a phosphogypsum pond in ICL Rotem (pond 5), raisingnew facility to increase its TBBA production capacity, which has operated at full capacity since the coastal dykes in the evaporation ponds, as well as investment in the new power station in Sodom, commencementbeginning of construction of the new pumping station (P-9) in the northern basin of the Dead Sea, the salt harvesting project in the Dead Sea and Clean Air Act related projects in Israel.2021.
In 2019addition, in 2021, ICL entered into the Company's plan isfast-growing EV market segment through the sale of phosphate-based raw materials for the production of LFP batteries in China and expects to focus on continuinggrow that business in the development of itscoming years, by increasing production capacity, in Spain, the new pumping station (P-9) in Sodom, Clean Air Act related projects in Israelglobal R&D collaborations and the salt harvesting project in the Dead Sea. In addition, the Company will be investing in a new production capacity of white phosphoric acid as part of its partnership in China (YPH).by moving downstream through innovative solutions.
The Company finances its capital expenditures from cash flows from operations and from credit facilities.
ICL launched its “Business Culture of Leadership” strategy, focused on enhancing market leadership across its three core mineral value chains of bromine, potash and phosphate, as well as realizing the growth potential of Innovative Ag Solutions. As part of the Company's strategy to obtain leadership positions in all its activities and given ICL’s integrated business model we are constantly considering measures, including divestiture opportunities, with respect to our low synergy businesses and businesses where we cannot be the market leader. ICL is constantly monitoring the competitive environment and will continue to seek ways to adhere with its strategy.Group Limited 192
C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
Research and development
ICL’s R&D and Innovation (RD&I) activities are part of itsour global strategic plan.plan and include product, formulation, and process developments. The activities include both internal research and joint activitiescollaborative research with a wide range of universities, research institutes, and start-ups along with other long‑term innovative activities. ICL’s R&Dstart-ups. Our RD&I is aimed towards presentcurrent and future market and customer needs and focuses onin addition to identifying additionalnew uses for our core minerals and derivatives. The Company’s core RD&I activities support each of our business segments, while the minerals in uselonger-term strategic projects, digital platforms, and their derivatives. technological solutions for farmers and agronomists are coordinated at the corporate level.
Fields of R&DRD&I include:
In 2021, we acquired Fertiláqua, one of Brazil's leading specialty plant nutrition companies, and the South American Plant Nutrition business of ADS. These acquisitions helped to establish ICL as the leading specialty plant nutrition business in Brazil and allows us to offer a broad range of solutions for plant nutrition and stimulation, covering all key Brazilian crops. The product portfolio includes enhanced efficiency fertilizers and controlled-release fertilizers, soil and foliar micronutrients, secondary nutrients, bio-stimulants, and adjuvants. In addition, the two companies provide us with significant R&D knowledge and capabilities which are being used to supplement our existing R&D infrastructure.
Food Technology: texture improvement, stabilization, salt reduction, shelf-life extension and alternative proteins.
E-mobility/Sustainability: energy storage; hydrogen carriers for fuel cells; lithium battery recycling.
Novel Materials: energy storage and low energy consumption applications; construction andflame retardants; paints & coatings additives; flame retardants; biocides; circularbiocides.
Circular economy – "from: waste to product" concept.product; recycling; efficiency improvement.
ICL’s Technology Roadmap, which is drivendigital platform continues to evolve in our mission to integrate multiple precision-ag technologies (sensors, imagery, and others) with additional agronomical research data from scoutingmultiple partners.
Digital technology developed by ICL digests data from multiple sources, automatically aggregating, standardizing and enriching it, thus creating one harmonized data lake with strong AL/ML engines. Those powerful engines enable us to deploy advanced data-driven solutions that drive real time agronomic decisions making like increasing crop yields and farmer's profitability. An increasing number of global trends combinedpartners are joining our revolutionary digital platform including leading global academic institutions and multinational agriculture companies solidifying this strong digital foundation with ICL's constant developmenthigh quality and improvement needs.highly actionable agronomic data.
Below are the main areas of the R&D activities by segments:
Industrial Products
New flame retardants for printed wire boards: commercialization of new phosphorus-based solutions for PWB according to emerging demands from the market, for example, Polyquel® P100. This is a polymeric phosphorus-based flame retardant active ester curing agent for epoxy laminates with superior performance. It is in the market development stage.
Flame retardants for polyurethanes: development of new phosphorus-based solutions and integrated phosphorus/bromine solutions as flame retardants for the polyurethane market (flexible and rigid foam). For example, our VeriQuel® F series, a new flexible phosphorus based active flame retardant for flexible polyurethane being launched in the market, and VeriQuel®R100, new reactive phosphorus-based flame retardant for rigid insulation foams in building and construction markets.
Energy storage: continued development of bromine-based energy storage solutions for Br-battery companies, using diverse compounds, and commercialization of the new bromine based electrolyte.
Biocides: continued development of new materials for water treatment and prevention of biofilm in industrial water-cooling systems and pulp & paper plants. Promotion of the Bactesperse® technology for pulp & paper, Reverse Osmosis membranes & cooling towers.
Phosphorus based products: Development of new phosphorus-based solutions for hydraulic fluids.
A new product, Bromoquel®, for safer handling of bromine was developed and implemented in the plants.
New |
A new product to treat uncontrolled Chlorine release is being developed and reached a pilot testing stage.
Magnesia based products: Development of formulations to fulfill unmet needs in the markets such as eliminating Aluminum salt in deodorants, for example, CareMag® D, which is already in the market with several leading international companies.
Knowledge transfer and technical support for the manufacturing of Lopon® ST (a stabilizer used as an additive in silicate-based paints) at our Bitterfeld plant (Germany). First production runs are expected during January 2022.
Additional products were developed for baby care applications (CareMag® B) and a cosmetic face mask (CareMag® M).
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Use of artificial intelligence for identifying new applications for bromine and bromine derivatives.
Implementation of the R&D department recommendations designed to clear bottlenecks, focused on flotation and crystalizing areas, for the purpose of increasing production capacity at ICL Iberia.
Total R&D expenses in 20182021 in the Potash segment were about $21 million.$5.6 million.
| The segment continues to check the adaptation of various potential types of phosphate rock |
| Research regarding environmental protection, including the development of methods to treat and reduce effluents and applications for |
Integration of secondary source Phosphate technologies (circular economy) - immediate uses in our production facilities in Europe and development of future sources for our fertilizer products, including technology road map for recycle and recovery of Phosphorous and nitrogen from secondary sources to transform our products into sustainable fertilizers.
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R&D Food Specialties supported further growth in the traditional markets and application areas of Meat/Poultry/Seafood (MPS), Dairy, and Bakery by expanding its footprint in emerging markets.
The established dedicated Front-End Innovation group screened over 100 technologies and start-ups within the first year. The corporate incubator platform Planet ICL invested in Protera Bioscience whose focus is the discovery and upscaling of protein-based functional ingredients.
The total PhosphateInnovative Ag Solutions segment'ssegment promotes innovation and development of new products and services.
Main R&D targets:
| • | Development of controlled release fertilizers with a faster biodegradable coating to satisfy the upcoming requirements from the EU Fertilizer Product Regulation in July 2026. |
Development of new biostimulant products and fertilizer products with embedded biostimulant to boost their performance.
Improvement of liquid and fully soluble fertilizers.
Development of products which improve water use efficiency.
Improvement of micronutrients solutions and sulfur fertilizer solutions
Development of tailor-made formulations based on customer requirements.
Total R&D expenses in 2018 were about $12 million.
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Circular Economy
For the past few years, we have engaged in the Circular Economy. For further information see “Item 4 - Information on the Company— Environment Social and Governance Practices— Circular Economy”.
Intellectual property
| Fyrol® - a brand name for a range of phosphorus-containing flame retardants targeting flexible and rigid polyurethane foam applications. |
| Joha® - a global trademark for dairy specialties, which specializes in emulsifying salts for processed cheese. |
| Merquel® - a line of inorganic brominated salts which can be used to control mercury emissions from coal power plants. |
| Osmocote® - a leading brand in the area of controlled released fertilizers which uses innovative technologies and is used globally by container nursery stocks, pot- plant growers and more. |
| Tari® - a brand in the meat industry as well as in the artisan business which focuses on the production and processing of meat products with functional additives, spices and flavors. |
Rovitaris® - a brand name for plant-based meat alternatives that are virtually indistinguishable from their traditional meat counterparts.
We do not believe that the loss of any single or group of related patents or trademarks would have a material effect on our operations or our financial results.
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D. TREND INFORMATION |
Trend information is included throughout the other sections of “Item 5 - Operating and Financial Review and Prospects— A. Operating Results”. In addition, the fluctuations in the operating results may continue in the upcoming quarters. Specific material drivers of these trends are identified in the discussion above with respect to the years ended December 31, 2018, 20172021 and 2016.2020. Seasonality of our business is included in “Item 4 - Information on the Company— B. Business Overview”.
E. OFF-BALANCE SHEET ARRANGEMENTSCRITICAL ACCOUNTING ESTIMATES
The evaluation of accounting estimates used in the preparation of ICL’s Financial Statements requires the Company's management to make assumptions regarding interpretations of laws which apply to the Company, circumstances and events involving considerable uncertainty. The Company's management prepares the estimates based on past experience, various facts, external circumstances, and reasonable assumptions relating to the pertinent circumstances of each estimate. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Note 15H (2)2 to our Audited Financial Statements.Statements contains a table that sets forth information about assumptions made by ICL with respect to the future and other reasons for uncertainty regarding to estimates that have a significant risk of resulting in a material adjustment to carrying amounts of assets and liabilities in the next financial year.
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| Credit from banks and others (not including current maturities) | 556 | 556 | - | - | - |
| Trade payables | 715 | 715 | - | - | - |
| Other payables | 330 | 330 | - | - | - |
| Operating lease obligations | 359 | 50 | 45 | 103 | 161 |
| Purchase obligations(1) | 3,033 | 646 | 192 | 606 | 1,589 |
| Employee Benefits | 526 | 25 | 80 | 126 | 295 |
| Long-term debt and debentures | 2,855 | 152 | 453 | 1,084 | 1,166 |
| Total | 8,374 | 2,474 | 770 | 1,919 | 3,211 |
| Financial liabilities – derivative instruments utilized for economic hedging | |||||
| Foreign currency and interest derivative instruments | 16 | 16 | - | - | - |
| Derivative instruments on energy and marine transport | 5 | 4 | 1 | - | - |
| 21 | 20 | 1 | - | - |
| A. | DIRECTORS AND OFFICERS |
The following table lists the names and ages of our directors as atof the publication date of this Annual Report. The mailing address of our directors is c/o Israel ChemicalsICL Group Ltd., 23 Aranha Street, Millennium Tower, Tel Aviv, 6120201, Israel.Israel.
| Name | Age | Commencement date as director | Director Qualification | Financial Expertise | Membership in Board Committees | ||
| Under the Israeli Companies Law | Under the NYSE rules | Under the Israeli Companies Law | Under the SEC rules | ||||
| Yoav Doppelt (Executive Chairman of the Board) | 53 | 12/18 and as CoB since 07/19 | (3) | - | - | Operations Committee (Chair) | |
| Aviad Kaufman | 51 | March 2014 | (3) | Financial Expert | - | Financing Committee (member) | |
| Avisar Paz | 65 | April 2001 | (3) | Financial Expert | - | Financing Committee (member) Operations Committee (member) | |
| Lior Reitblatt | 64 | November 2017 | Independent Director | Independent Director | Financial Expert | Audit Committee Financial Expert | Audit & Accounting Committee (member) Compensation Committee (member) Financing Committee (member) Operations Committee (member) |
| Ovadia Eli | 76 | August 2011 | (3) | - | - | Safety, Environment, Climate & Public Affairs Committee (member) Operations Committee (member) | |
| Reem Aminoach | 60 | March 2017 | (4) | Independent Director | Financial Expert | - | Safety, Environment, Climate & Public Affairs Committee (member) Operations Committee (member) |
| Sagi Kabla | 45 | February 2016 | (3) | Financial Expert | - | Financing Committee (Chair) Safety, Environment, Climate & Public Affairs Committee (member) Operations Committee (member) | |
| Tzipi Ozer Armon | 55 | January 2020 | Independent Director | Independent Director | Financial Expert | - | - |
| Gadi Lesin | 54 | March 2021 | Independent Director | Independent Director | Financial Expert | Audit Committee Financial Expert | Audit & Accounting Committee (member) Safety, Environment, Climate & Public Affairs Committee (member) Operations Committee (member) |
| Dr. Miriam Haran(1) | 72 | July 2021 | External Director | Independent Director | Financial Expert | Audit Committee Financial Expert | Audit & Accounting Committee (Temporary Chair until 05/22) Compensation Committee (Chair) Safety, Environment, Climate & Public Affairs Committee (Cahir) |
Dafna Gruber(2) | 56 | January 2022 | External Director | Independent Director | Financial Expert | Audit Committee Financial Expert | Audit & Accounting Committee (will become Chair as of 05/22) Compensation Committee (member) |
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| (1) |
| (2) | Ms. Dafna Gruber's first 3-year tenure commenced as of the date of approval of ICL's shareholders in January 2022. Ms. Gruber replaced Ms. Ruth Ralbag who served as an external director until November 3, 2021. Ms. Ruth Ralbag notified the Chairman of ICL's Board of Directors in October 2021 of her decision to resign from her position as an external director of the |
| (4) | Mr. |
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Yoav Doppelt. Mr. Doppelt serves as the Chief Executive Officer of Israel Corp. Previously Mr. Doppelt served as the Chief Executive Officer of Kenon Holdings Ltd., a global company (NYSE: KEN), and Lior Reitblatt are independent directors underExecutive Chairman of IC Power Ltd., a power generation company, from March 2014 to September 2017. Prior thereto, Mr. Doppelt was the rules applicable to U.S. companies listed on the NYSE. Messrs. Johanan Locker, Avisar Paz, Aviad Kaufman, Sagi Kabla, Ovadia Elifounder and Yoav Doppelt are not considered independent directors by virtueChief Executive Officer of the positions they hold with our controlling shareholder orOfer Group’s private equity fund where he was involved in numerous investments in the Company; these directors areprivate equity and technology sectors. Mr. Doppelt has served as the Chief Executive Officer of XT Investments (formerly known as XT Capital and Ofer Hi-Tech) since 2001. Mr. Doppelt has actively led several public offerings of equity and debt offerings in the US and Europe, and he has extensive operational and global business experience with growth companies. Mr. Doppelt also not considered independent directors under Israeli law due to their relationship with our controlling shareholder or with the Company.
Aviad Kaufman. Mr. Kaufman is the chief executive officerChief Executive Officer of Quantum Pacific (UK) LLP,One Globe Business Advisory Ltd, the chairman of the board of Israel Corporation Ltd., and a board member of Kenon Holdings Ltd., OPC Energy Ltd. and other private companies, each of which may be associated with the same ultimate beneficiary, Mr. Idan Ofer. Previously, heFrom 2017 until July 2021, Mr. Kaufman served as chief financial officerthe Chief Executive Officer of Quantum Pacific (UK) LLP (2008-2017)and from 2008 until 2017 as Chief Financial Officer of Quantum Pacific (UK) LLP (and its predecessor Quantum Pacific Advisory Limited). He served as director of international taxation and held variousFrom 2002 until 2007, Mr. Kaufman fulfilled different senior corporate finance roles at Amdocs Ltd. (2002-2007). Previously, Mr. Kaufman held various consultancy positions with KPMG. Mr. Kaufman is a certified public accountant and holds a BABachelor’s degree in Accounting and Economics from the Hebrew University ofin Jerusalem (with honors)distinction), and an MBA majoringa Master’s of Business Administration in Finance from Tel Aviv University. University.
Avisar Paz. Mr. Paz isserved as the Chairman of the Board of Directors of OPC Energy Ltd. until January 3, 2021. Previously, Mr. Paz served as the Chief Executive Officer of Israel CorporationCorp. and was previously Israel Corporation'sprior to that, as the Chief Financial Officer.Officer of Israel Corp. Mr. Paz serves as directorreceived a B.A. degree in various subsidiaries of Israel Corporation, including in Oil Refineries Ltd. Mr. Paz holds a BA in economicsEconomics and accountingAccounting from Tel AvivTel-Aviv University and is a Certified Public Accountantcertified public accountant in Israel.Israel (CPA).
Lior Reitblatt.Mr. Reitblatt is a Certified Public Accountant, and holds a BA in accounting and economics from Tel Aviv University and an MBA from the University of California, Berkeley. Until recently, Mr. Reitblatt served as CEOChief Executive Officer and Chairman of the Board of Super-Pharm (Israel) Ltd. Mr. Reitblatt has also previously served, among other things,positions, as Chairman of the Board of Life Style Ltd. and member of the board of Office Depot Israel Ltd.
Ovadia Eli. Mr. Eli isserved as the Chairman of the Board of Oil Refineries Ltd. HeLtd for two terms, the first from 1996 to 2003 and the second from 2015 to August 2021. Mr. Eli also served as Chairman of the Board of the Israel Airports Authority, Israel Military Industry (I.M.I), Shmanim Besisyim Haifa Ltd. and I.C.P.I. He wasMr. Eli served as a member of the BoardsBoard of Directors of Salt Industries Israel Ltd., Shaarei Ribit Ltd., Zim Integrated Shipping Services Ltd. and OPC Rotem Ltd. Mr. Eli holds a BA degree in educational counselingEducational Counseling and bible studiesBible Studies from the Haifa University and is a graduate of the Lifshitz Teachers College in Jerusalem.
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Reem Aminoach. Mr. Aminoach is a Certified Public Accountant, and holds a BA in accounting and economics, Tel-Aviv University (academic honors, Dean's honor list) and MBA in business administration, Tel-Aviv University.currently serves as director of Israel Aerospace Industries. Until recently, Mr. Aminoach served as the founding partner of the accounting firm Shtainmetz Aminoach & Co. In his military service, Mr. Aminoach, Brigadiera brigadier general, served as a member of the General Staff Forum of the IDF, Head of Budgets at the Ministry of Defense, financial advisorFinancial Advisor to the IDF Chief of Staff and Head of the IDF Budget Division. Previously, Mr. Aminoach served as director at Ofer Investments Ltd. and as director and Chairman of the Audit Committee at Zim Ltd., of the Israel CorporationCorp. group. Mr. Aminoach also served as a member of the Board of Governors of Hadassah Medical Center.
Sagi Kabla. Mr. Kabla is the Chief Financial Officer of Israel CorporationCorp. since December 2015. HeMr. Kabla serves as director in Bazan Groupof Oil Refineries Ltd and previously served as Senior Executive of Business Development, Strategy and IR inat Israel Corporation.Corp. Prior to joining Israel Corp. he, Mr. Kabla held various management roles inat KPMG Corporate Finance.Finance and M&A. Mr. Kabla holds an MBA (Finance)degree in Finance from COMAS and a B.A. degree in Economics and Accounting from Bar-Ilan University and washe is qualified as CPA (Isr.)a certified public accountant (Israel).
Gadi Lesin. Mr. Lesin served as President and CEO of Kenon HoldingsStrauss Group Ltd. (NYSE:KEN)("Strauss Group"), an international food and beverage company and the largest food company in Israel, from 2009 to 2018. Mr. Lesin successfully led the Strauss Group through a time of intense economic, global and social change. Under his leadership, the Strauss Group strengthened its international operations, more than doubled its equity value, and grew its profits significantly. Mr. Lesin currently serves as a director in ORIAN SH.M. Ltd. and as an Executive Chairman of ICpower Ltd. as well asexternal director in Electra Consumer Products, both companies listed on the Founder and CEO of the Ofer Group private equity fund.TASE. Mr. DoppeltLesin holds a BAbachelor's degree in economics andbusiness management from the FacultyTel Aviv College of Industrial Management at the Technion and an MBA degree from HaifaBen Gurion University.
Miriam Haran. Dr. Haran has been involved in environmental management and safety issues for over forty years in various key positions. Dr. Haran is currently serving as chair of Israel Resource Efficiency Center – a knowledge and consulting center for reducing the environmental impact of industry by streamlining raw materials, energy, water, etc. She is chair of the Weitz Center for Sustainable Development and a board member of M.A.I – a major Israeli recycling company of electrical and electronic waste as well as the chair of the Public Safety Committee in the Prime Minister's Office. Dr. Haran previously served as Director General, Deputy Director General and Chief Scientist of Israel’s Ministry of Environmental Protection, as well as the Head of Ono Academic College’s MBA Program in Environmental Management. Dr. Haran has served in numerous scientific, corporate, and public organizations. She was Chair of the Israel Consumer Council, Environmental Consultant, Board Member of The Environmental Services Company Ltd. (ESC), Board Member of BGN Technologies Ltd., and Member of the General Assembly of the Jerusalem Institute for Israel Studies. Dr. Haran was Senior Researcher at A.Y. Laboratories, Researcher at Unikoor Biotechnology, Researcher and Senior Lecturer at the Hebrew University, and Researcher at Rutgers University in Newark, New Jersey. Dr. Haran served as an external director of ICL between 2010-2018. Dr. Haran holds a B.Sc. in Natural Sciences from the Hebrew University of Jerusalem and a PhD in Organic Chemistry from Brandeis University.
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Dafna Gruber. Ms. Gruber currently serves as the Chief Financial Officer of Netafim Ltd., a precision irrigation solutions company. Prior to joining Netafim Ms. Gruber held Chief Financial Officer positions in various companies including Clal Industries from 2015 to 2017, Nice Systems Ltd. from 2007 to 2015, and Alvarion Ltd. from 1999 to 2007. Ms. Gruber currently serves as an external director or independent director of several public companies, including Nova Measuring Instruments Ltd, Tufin Software Technologies Ltd, Cognyte Ltd. and Cellbrite Ltd. Ms. Gruber is a certified public accountant and holds a BA degree in Accounting and Economics from Tel Aviv University.
The following table lists the names, ages and positions of our Executive Officers (who are not directors) as of the publication date of this report.Annual Report. The address for sending notices is c/o Israel ChemicalsICL Group Ltd., 23 Aranha Street, Millenium Tower, Tel Aviv, 6120201, Israel.
| Name | Age | Position |
Raviv Zoller | President & Chief Executive Officer | |
| Senior Vice President, Global Internal Auditor | ||
| Anantha N. Desikan | 54 | Executive Vice President, ICL Chief Innovation and Technology Officer |
| Anat Tal-Ktalav | 53 | President, ICL Industrial Products Division |
| 62 | ||
| Chief Financial Officer | ||
| Elad Aharonson | 48 | Executive Vice President, ICL Innovative Ag Solutions Division |
| Ilana Fahima | 56 | Executive Vice President, Chief People Officer |
| Lilach Geva-Harel | 45 | Executive Vice President, Global General Counsel |
Meir Mergi | 59 | President, Potash Division |
| Miri Mishor | ||
| Executive Vice President, ICL | ||
_________________
| (1) |
| (2) | On January 1, 2022, Mr. Aviram Lahav joined ICL as Chief Financial Officer, replacing Mr. Kobi Altman. |
| (3) | On January 1, 2022, Mr. Chris Millington entered into office as President, ICL Phosphate Specialty Solutions Division, replacing Ofer Lifshitz. |
Raviv Zoller. Mr. Zoller entered officehas served as ICL's President & CEO onand Chief Executive Officer since May 14, 2018, following his appointment by the Board of Directors on February 25, 2018. Prior to joining ICL, from 2008, Mr. Zoller served as the CEOChief Executive Officer of I.D.I. Insurance Company Ltd. (“Bituach Yashir”), which is listed on the Tel Aviv Stock Exchange.TASE. In 1999, heMr. Zoller founded Ness Technologies Inc., which began trading on NASDAQ in 2004 and served as its President and CEOChief Executive Officer until 2007. Mr. Zoller voluntarily servesserved from 2012 to October 2019 as chairmanChairman of the Ethiopian National Project (ENP), a non-profit organization, since 2012.organization. Mr. Zoller holds a B.A. degree in Economics and Accounting from Tel Aviv University and is a qualified CPA.certified public accountant.
Anantha N. Desikan. Dr. Anantha Desikan was appointed Chief Innovation & Technology Officer of ICL in November 2018 and was promoted to EVP in November 2019. Dr. Desikan joined ICL in 2007 and has served in senior commercial and technology management roles including Senior Vice President of ICL Industrial Products’ Flame Retardants business (2014-2018), President, ICL-IP America (2013-2015) and VP Global Phosphorous R&D (2007-2013). Prior to joining ICL in 2007, Dr. Desikan held technology management roles at Supresta and Akzo Nobel. Mr. Desikan holds a Ph.D and M.S degree in Chemical Engineering from Clarkson University, Potsdam, New York, and a B.S. degree in Chemical Engineering from Coimbatore Institute of Technology, Madras University, India.
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Anat Tal-Ktalav. Mrs. Anat Tal-Ktalav has been servingserves as presidentPresident of ICL´s Industrial Products Division since August 2018. Mrs. Tal-Ktalav joined ICL in 1995 and served in various leading positions in the Industrial Products business segment, including Marketing Director of Flame Retardants, Vice President for Industrial Solutions (Bromine and Compounds Business Line), Deputy to the President of ICL Industrial products,Products, and until recently, as the Executive Vice President of ICL Industrial Products. Mrs. Tal-Ktalav holds a degree in chemical engineeringChemical Engineering from Ben Gurion University.
Chris Millington. Mr. Millington serves as President, ICL Performance Products (2007-2013).Phosphate Specialty Solutions Division since 2022. Mr. Millington joined ICL in 2021. He has more than 25 years of C-Level and Senior Executive experience with global and regional expertise transforming B2B and B2C businesses in North America, Europe, and the Asia Pacific, working at the highest levels within large, publicly listed, global and private companies. Since 2019 Mr. Millington has been a retained Executive Adviser to major global PE funds and advising ingredient industry companies on strategy, M&A, and business transformation. From 2012-18, Mr. Millington worked for Firmenich initially running the Americas, before being promoted to President of the Flavor Division, a 1 Bio + business with global presence, transforming the division to being the growth leader of the industry and driving a strong M&A agenda. Prior to ICLthis, he held managerial positions with Monsantoserved as Global Head of Foodservice Beverages at Nestlé; the youngest ever VP to manage a global BU at Nestlé HQ, and Solutia.then established the first AP regional office for Nestle Professional in Singapore. Mr. WeidhasMillington holds a B.Sc.business degree and has attended multiple IMD and London Business School courses in Chemical Engineering and an MBA from Northeastern University.support of his ongoing leadership development.
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Ilana Fahima. Ms. Fahima serves as EVP, Chief People Officer, since November 2018. Prior to joining ICL, Ms. Fahima served as Vice President HR for Global Quality and Head of Israel HR at Teva Pharmaceutical Industries Ltd. Before joining Teva, sheMs. Fahima held several positions at Maccabi Health Services, among them Regional HR Director and Regional Service Manager. Ms. Fahima holds a BA degree in Social Work and an MBA degree in Health Care Management, both from Ben Gurion University.
Lilach Geva-Harel. Mrs. Geva-Harel entered officeserves as SVP,EVP, ICL's Global General Counsel onsince February 1, 2019, following her appointment by the Board of Directors on December 27, 2018.2019. Prior to joining ICL, from 2009 Mrs. Geva-Harel served as Senior Deputy to CEOthe Chief Executive Officer and Head of Investments House's Headquarters of Psagot Investment House Ltd., as well as the general legal counsel. Sheits General Legal Counsel. Mrs. Geva-Harel was previously served as a Partner in the Merger & Acquisitions Department at Gross, Kleinhendler, Hodak, Halevy, Greenberg & CoCo. Law Offices (GKH). Mrs. Geva-Harel serves as a director at REE Automotive Ltd. (NYSE: REE) a global company. Mrs. Geva-Harel holds an LLB degree and an LLM degree, both from Bar Ilan University and is a member of the Israel Bar.
Meir Mergi. Mr. Mergi serves as President of ICL Potash Division since March 2021 (first as acting President and starting January 2021 as President). From March 2017 to Meir served as SVP, ICL Dead Sea Operations. Prior to that Meir held the position of VP Operations in the Performance Products Division, based in Germany. From 2010 to 2014, Mr. Mergi served as the CEO of the Dead Sea Magnesium and before that he held various senior positions in the operations of Dead Sea Magnesium. Meir holds a BSc degree in Materials Engineering and MBA in Business Management, both from Ben Gurion University.
Miri Mishor. Mrs. Mishor has been servingserves as Senior Vice President,EVP, ICL Information Technology since 2014. Mrs. Mishor joined ICL in 1986 and served in various positions, including CIO of ICL Industrial Products and Vice PresidentVP Information Systems of ICL Fertilizers. Mrs. Mishor holds a B.Sc. degree in Mathematics and Computer Science and a M.Sc. degree in Industrial Management from Ben Gurion University.
Nitzan Moshe. Mr. Moshe serves as EVP, ICL Operations since October 2019. From 2014 to the present, Mr. Moshe has served as SVP, Operations of ICL Industrial Products. Prior to that, Mr. Moshe held several senior positions at Rotem Amfert Negev, Ltd., including VP of its Acids & Fertilizers Division, Head of Procurement and Contracts, and Manager of Rotem’s Sulfuric Acid Plant. Nitzan holds a MBA degree and BSc degree in Chemical Engineering, both from Ben Gurion University, Israel.
Noam Goldstein. Mr. Noam Goldstein has been servingserves as President of ICL´s Potash DivisionICL EVP for Operational Excellence, Innovation & Energy since August 2018.March 2021. Mr. Goldstein joined ICL in 1986 and served in various positions in the Potash business division,Division, including Vice President of Business Development, CFO in Europe, Vice President of Infrastructure, Senior Vice President Operations at ICL Dead Sea, and until recently Executive Vice Presidentas the president of ICL´s Potash and Magnesium. He also serves as chair of the environmental committee and as a board member at Israel´s Manufacturing Association.Division. Mr. Goldstein holds a B.A. degree in Economics and Business Administration from the Hebrew University of Jerusalem and a M.A. degree in Economics from Ben Gurion University. HeMr. Goldstein is also a graduate of the Heschel Sustainability Leadership Fellowship Program.
Family Relationships
There are no family relationships between any members of our executive management and our directors.
Arrangements for Election of Directors and Members of Management
There are no arrangements or understandings with major shareholders, customers, suppliers or others pursuant to which any of our executive management or our directors were elected.
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B. COMPENSATION
Directors Compensation: Under the Israeli Companies Law, and regulations promulgated thereunder (collectively, the "Companies Regulations" or “Compensation Regulations”), the compensation of directors must comply with the Company's compensation policy andgenerally requires the approval of the HR & Compensation Committee, the Board of Directors and the shareholders, in that order. The approval of the HR & Compensation Committee and the Board of Directors must be in accordance with the Company’s compensation policy. In special circumstances, the HR & Compensation Committee and Board of Directors may approve a compensation arrangement that is inconsistent with the Company’s compensation policy, provided that they have considered the same considerations and matters required for the approval of a compensation policy in accordance with the Companies Law, and the approval of the Company’s shareholders is by the Special Majority for Compensation, as described in ”Item 7 - Major Shareholders and Related (and Interested) Party Transactions – B. Related (and Interested) Party Transactions – Approval of Directors and Officer Compensation”.
Generally, shareholder approval is not required for director compensation payable in cash (annual and participation fees) up to the maximum amounts set forth in regulations promulgated under the Companies Law governing the compensation of external directors (the “Compensation Regulations”). The Compensation Regulations set minimum and maximum amounts of cash compensation (an annual fee and participation fees), depending on the sizeamount of the company,Company’s shareholders’ equity, or alternatively cash and/or equity compensation may be paid at a certain ratio to the compensation paid to other directors who are not controlling shareholders or employed thereby and who are not employed by the Company (collectively, "Other Directors"), referred to as ‘relative cash compensation’.
Effective as of January 9, 2021, the compensation of our external directors and all other non-executive directors that are entitled to compensation for their service in such capacity, was reduced to the fixed annual and per meeting compensation amounts payable to expert directors under the Compensation Regulations, replacing the "relative compensation” model that was previously paid to our directors. According to the determination of our Compensation Committee and Board of Directors, such compensation according to the Compensation Regulations) applies to all of our directors, as may serve from time to time, excluding directors who are office holders in(within the meaning of the Companies Law) of Israel Corp. do not receive additional cash compensationThe Compensation of such directors who are office holders of Israel Corp. for their servicesservice as directors. Instead, such fees are(excluding our Executive Chairman of the Board, Mr. Yoav Doppelt who has a separate compensation arrangement, as detailed below), is included in the annual management fees we paypaid to Israel Corp. pursuant to our agreement with it. TheAccordingly, the management fees that were paid to Israel Corp. during 2021, effective as of January 1, 2018,2021, following the approval of the general meeting of shareholders from April 24, 2018, include,on January 5, 2021, included, among other things, all compensation components, in equity (or the economic benefit thereof) and in cash, for the services of Company directors who are officer holders of Israel Corp., excluding Mr. Doppelt.
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The Company also covers and/or reimburses its directors for expenses (including travel expenses) incurred in connection with meetings of the Board of Directors and its committees or performing other services for the Company in their capacity as directors, in accordance with the Company's Compensation Policy and the Compensation Regulations. Our Board Members are also entitled to the Company'sbenefit from directors' and officers' liability insurance and indemnification and exemption arrangements for office holders.entered into with them. For further information, see “Item 6 - Directors, Senior Management and Employees— C. Board Practices – Insurance and Indemnification”.
On January 31, 2022, and February 8, 2022, our HR & Compensation Committee and Board of Directors, respectively, approved, subject to the Annual General Meeting of our shareholders (the "Meeting"), expected to take place on March 30, 2022, new compensation terms for Mr. Yoav Doppelt, the Executive Chairman of our Board of Directors, which shall be effective as of the termination of the Management Agreement on July 1, 2022, and subject thereto, and subject both to his reelection and to the approval of our new compensation policy at the Meeting. Following their approval, Mr. Doppelt's new compensation terms shall be in effect for a period of three years. According to the proposed new compensation terms, Mr. Doppelt will be employed by the Company, and will continue to invest a significant portion of his time to the Company. Subject to their approval in the Meeting, the Mr. Doppelt's new compensation terms will include (i) a NIS 1.8 million (approximately $562,500) annual cost of employment, (ii) entitlement to an annual cash bonus with a Target STI, which will essentially also be his maximum STI payout in any given year, of NIS 1.2 million (approximately $375,000), calculated in accordance with the Executive Chairman’s STI formula set forth in the New Compensation Policy, as may be amended from time to time, an (iii) termination arrangement which includes a six-month adjustment period and six month advance notice period, during both of which he will continue to be entitled to all of his compensation terms, including STI payouts and continued vesting of his existing LTI plans, as well as additional severance payment by the Company, in addition to the mandatory severance payment, equal to his last monthly salary multiplied by the number of years that he was employed by the Company, serving as its Executive Chairman of the Board (i.e., as of July 1, 2022). In addition, our HR & Compensation Committee and Board of Directors approved on January 31, 2022 and February 6, 2022 and February 8, 2022, respectively, subject to shareholder approval at the Meeting, a three-year long-term incentive award to Mr. Yoav Doppelt, for the years 2022-2024, of non-marketable options, exercisable into Ordinary Shares, with a total value of NIS 9 million (approximately $2.8 million), or NIS 3 million (approximately $937,500) per vesting annum.
Other than the agreement with Mr. Doppelt in his capacity as Executive Chairman of the Board, described above, and the acceleration of equity awards upon termination of director service under certain circumstances, we do not have any written agreements with any current director providing for benefits upon the termination of such director’s relationship with us.
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Equity (LTI) Grants to Board Members:(1)
| Grant for Year | Offerrees | Grant Date | Type of Equity(2) | Dates of Organs' Approvals | Grant Value (ILS) per Director | Grant Amount per Director | Expiration Date & Vesting Schedule |
| 2021 | Mr. Yoav Doppelt, Executive Chairman of the Board | 1.7.2019 | Options | HR & Comp. Committee & Board – 15.4.19 Shareholders (Extraordinary GM) – 29.5.19 | 3 million | 2,168,675 | Expiration Date: 30.6.2024 Vesting: one-half of the Options vesting upon the lapse of 24 months from Grant Date and one-half upon the lapse of 36 months from the Grant Date |
| Grant for Year | Offerrees | Allocation Date | Type of Equity(2) | Dates of Organs' Approvals | Grant Value (ILS) | Grant Amount | Exceptions & Comments | |
| 2018 | each of our directors who serve from time to time (excluding the Chairman of the Board) | 10.1.2018 | restricted shares | HR & Comp. Committee – 27.11.17 Board – 5.12.17 Shareholders (Annual GM) – 10.1.18 | 310,000 | 22,080 | 1. | Our former board members, Messrs. Geoffery Merszei and Yaacov Dior, whose term of office ended on February 13 and 26, respectively, were entitled to 2,057 and 2,843 Restricted Shares, reflecting their entitlement to the relative portion of the 2018 Grant. |
| 2. | Dr. Miriam Haran, whose term of office ended in August 2018, was allocated 14,793 restricted shares. | |||||||
| 3. | Dr. Nadav Kaplan was allocated 5,930 restricted shares on August 20, 2018. | |||||||
| 4. | Mr. Yoav Doppelt was allocated 758 restricted shares on December 12, 2018. | |||||||
| 5. | Messrs. Kaufman, Paz and Kabla waived in advance their entitlement to the equity compensation per 2018. | |||||||
| 2019 | each of our directors who serve from time to time (excluding the Chairman of the Board & Office Holders of IC) | 1.1.2019 | restricted shares | HR & Comp. Committee & Board – 19.6.18 Shareholders (Annual GM) – 20.8.18 | 310,000 | 14,623 | ||
| (1) | The Equity awards are made pursuant to the Company’s Equity Compensation Plan (2014), as amended in June 2016. |
| (2) | On January 31, 2022 and February 6, 2022 and February 8, 2022, our HR & Compensation Committee and Board of Directors approved, respectively, subject to shareholder approval at the annual general meeting of our shareholders expected to take place on March 30, 2022 (the "Grant Date"), a three-year long-term incentive award to Mr. Yoav Doppelt, for the years 2022-2024, in the form of options, with a total value of NIS 9 million (approximately $2.8 million), or NIS 3 million (approximately $937,500) per vesting annum. The vesting of the 2022-2024 LTI Grant will be in three equal tranches, with one-third of the Options vesting upon the lapse of 12 months from Grant Date, one-third of the Options vesting upon the lapse of 24 months from Grant Date and one-third upon the lapse of 36 months from the Grant Date. The Options may be exercised, in whole or in part, as of the date of “maturity” of each tranche and until the lapse of five years after the Grant Date. |
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The aggregate compensation amount grantedincurred to all of the members of our senior management (Global Executive Committee – GEC) as of December 31, 2018,2021, was approximately $12.5$18 million for the year 2018.
The following table and accompanying footnotesnotes describe the compensations grantedcompensation incurred for the year 20182021 with respect to the five highest earning senior officers in ICL.of ICL for such period.
| Details of the Recipient | Payments for services | ||||||
| Name | Position | Scope of position | Base Salary | Compensation(1) | Bonus (STI) (2) | Equity based compensation (LTI)(3) | Total |
| US$ thousands | |||||||
Raviv Zoller(4) | President & Chief Executive Officer | 100% | 759 | 1,103 | 1,045 | 1,118 | 3,266 |
Kobi Altman(5) | Former Chief Financial Officer | 100% | 440 | 604 | 709 | 545 | 1,858 |
Ofer Lifshitz(6) | Former President of Phosphate Solutions Division | 100% | 381 | 536 | 639 | 371 | 1,546 |
Anat Tal-Ktalav(7) | President of Industrial Products Division | 100% | 310 | 441 | 386 | 371 | 1,198 |
Elad Aharonson(8) | President, Innovative Agro Solutions Division | 100% | 319 | 768 | 285 | 83 | 1,136 |
| Details of the Recipient | Payments for services | |||||||
| Name | Position | Scope of position | Holding in equity | Base Salary(1) | Compensation (2) | Bonus(3) | Equity based compensation (4) | Total |
| US$ thousands | ||||||||
Raviv Zoller (5) | President & CEO since May 14, 2018 | 100% | * | 420 | 1,035 | 523(6) | 433 | 1,991 |
Johanan Locker (7) | Executive Chairman of the Board of Directors | 90% | * | 534 | 750 | 492 | 544 | 1,786 |
Charles Weidhas(9) | Chief Executive Officer, Industrial Products (COO) as of July 2016 | 100% | * | 379 | 855 | 350 | 466 | 1,671 |
Asher Grinbaum (10) | Acting CEO, ICL, between September 2016 to May 14, 2018 | 100% | * | 172 | 477 | 909(11) | 27 | 1,413 |
Kobi Altman(12) | Chief Financial Officer (CFO) as of April 2015 | 100% | * | 391 | 523 | 367 | 467 | 1,357 |
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| (1) |
The salary items (compensation) |
| The |
| The expense |
| (4) | Mr. Zoller’s terms of employment, |
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Mr. |
| Year of grant | Approval dates | Offeree | Allocation date | Quantity of option warrants | Quantity of restricted shares | NIS exercise price (subject to adjustments) | Quantity of valid option warrants as at February 20, 2019 | Weighted economic value of each option warrant (4) | Fair value of restricted shares | Exercise price of option warrants | Share price | Quantity of option warrants expired as at February 20, 2019 | Notes |
| On date immediately preceding allocation (NIS) | as at February 20, 2019 (NIS) | ||||||||||||
| 2014 | Raviv Zoller | NA | |||||||||||
| Johanan Locker | NA | ||||||||||||
| Charles Weidhas | September 27, 2014 | 95,129 | 22,250 | 28.71 | 63,418 | 6.57 | 28.09 | 25.289 | 20.2 | 31,711 | Exercise price of the option warrants is 25.2% higher than the share price on February 20, 2019; hence the option warrants are “out of the money”. | ||
Asher Grinbaum(1) | September 27, 2014 | 95,129 | 22,250 | 28.71 | 63,418 | 6.57 | 28.09 | 25.289 | 20.2 | 31,711 | |||
| Kobi Altman | NA | ||||||||||||
| 2015 | Compensation Committee and Board: May 10 and 12, 2015, respectively | Raviv Zoller | NA | Exercise price of the option warrants is 27.8% higher than the share price on February 20, 2019; hence the option warrants are “out of the money”. | |||||||||
| Johanan Locker | NA | ||||||||||||
| Charles Weidhas | July 8, 2015 | 137,363 | 23,200 | 27.76 | 45,787 | 4.55 | 26.94 | 25.829 | 20.2 | 91,576 | |||
Asher Grinbaum(1) | July 8, 2015 | 137,363 | 23,200 | 27.76 | 45,787 | 4.55 | 26.94 | 25.829 | 20.2 | 91,576 | |||
| Kobi Altman | July 8, 2015 | 137,363 | 82,591(2) | 27.76 | 45,787 | 4.55 | 26.94 | 25.829 | 20.2 | 91,576 | |||
| Year of grant | Approval dates | Offeree | Allocation date | Quantity of option warrants | Quantity of restricted shares | NIS exercise price (subject to adjustments) | Quantity of valid option warrants as at February 20, 2019 | Weighted economic value of each option warrant (4) | Fair value of restricted shares | Exercise price of option warrants | Share price | Quantity of option warrants expired as at February 20, 2019 | Notes |
| On eve of allocation (NIS) | as at February 20, 2019 (NIS) | ||||||||||||
| 2016 | Compensation Committee and Board: May 16 and 17, 2016, respectively. Respecting Mr. Locker, general meeting approval: August 29, 2016 | Raviv Zoller | NA | Exercise price of the option warrants is 22.8% lower respecting Mr. Locker, 19.6% lower respecting Mr. Grinbaum and 22.2% lower respecting all others, than the share price on February 20, 2019, hence the option warrants are "in the money". | |||||||||
| Johanan Locker | August 29, 2016 | 186,335 | 55,215 | 17.05 | 186,335 | 4.19 | 15.42 | 15.595 | 20.2 | - | |||
| Charles Weidhas | June 30, 2016 | 133,747 | 39,632 | 17.05 | 133,747 | 4.83 | 16.3 | 15.716 | 20.2 | - | |||
Asher Grinbaum(1) | February 14, 2017 | 114,065 | 37,592 | 17.22 | 114,065 | 5.83 | 17.69 | 16.233 | 20.2 | - | |||
| Kobi Altman | June 30, 2016 | 145,549 | 43,129 | 17.05 | 85,549(5) | 4.83 | 16.3 | 15.716 | 20.2 | - | |||
| 2017 | Compensation Committee and Board: June 19 and 20, 2017, respectively. Respecting Mr. Locker, general meeting approval: August 2, 2017 | Raviv Zoller | NA | Exercise price of the option warrants is 22% lower respecting Mr. Locker and 28.5% lower respecting all others, than the share price on February 20, 2019, hence the option warrants are "in the money". | |||||||||
| Johanan Locker | August 2, 2017 | 164,916 | 52,910 | 16.49 | 164,916 | 5.46 | 17.01 | 15.744 | 20.2 | - | |||
| Charles Weidhas | June 20, 2017 | 128,627 | 42,089 | 15.31 | 128,627 | 5.17 | 15.8 | 14.448 | 20.2 | - | |||
Asher Grinbaum(1) (3) | June 20, 2017 | 128,627 | 42,089 | 15.31 | 128,627 | 5.17 | 15.8 | 14.448 | 20.2 | - | |||
| Kobi Altman | June 20, 2017 | 128,627 | 42,089 | 15.31 | 128,627 | 5.17 | 15.8 | 14.448 | 20.2 | - | |||
| Year of grant | Approval dates | Offeree | Allocation date | Quantity of option warrants | Quantity of restricted shares | NIS exercise price (subject to adjustments) | Quantity of valid option warrants as at February 20, 2019 | Weighted economic value of each option warrant (4) | Fair value of restricted shares | Exercise price of option warrants | Share price | Quantity of option warrants expired as at February 20, 2019 | Notes |
| On eve of allocation (NIS) | as at February 20, 2019 (NIS) | ||||||||||||
| 2018 | Comp Com & BoD - February 22 and 25, 2018, respectively, general meeting April 24, 2018 | Raviv Zoller | May 14, 2018 | 384,615 | 120,919 | 15.76 | 384,615 | 5.19 | 16.54 | 15.389 | 20.2 | - | Exercise price of the option warrants is 23.8% lower respecting Mr. Zoller, 12.5% lower respecting Mr. Locker and 29.7% lower respecting all others, than the share price on February 20, 2019; hence the option warrants are “in of the money”. |
| Comp Com & BoD - June 19, 2018, general meeting August 20, 2018 | Johanan Locker | August 20, 2018(6) | 402,685 | 47,244 | 18.06 | 402,685 | 5.96 | 19.05 | 17.679 | 20.2 | - | ||
| Comp Com & BoD – March 5 and 6, 2018, respectively | Charles Weidhas | March 6, 2018 | 140,000 | 43,894 | 14.52 | 140,000 | 4.75 | 15.15 | 14.205 | 20.2 | - | ||
| NA | Asher Grinbaum(1) (3) | NA | |||||||||||
| Comp Com & BoD – March 5 and 6, 2018, respectively | Kobi Altman | March 6, 2018 | 140,000 | 43,894 | 14.52 | 140,000 | 4.75 | 15.15 | 14.205 | 20.2 | - | ||
| (6) | Mr. Lifshitz served as President of the Phosphate Solution Division since August 2018 and has announced his wish to retire on November 18, 2021 (the "Notice Date"). Mr. Lifshitz’s employment agreement provided that: (a) Mr. Lifshitz’s base salary may be updated twice a year according to the rise in the Consumer Price Index in the months that passed since the previous update. Accordingly, Mr. Lifshitz’s monthly base salary, as of December 31, 2021, was approximately NIS 103,382 (approximately $32,300); (b) the employment agreement is for an unlimited period and may be terminated by either party at any time by advance written notice; (c) Mr. Lifshitz is entitled to an advance notice period of 3 months; and (d) Mr. Lifshitz is entitled to all benefits customary in the Company, such as regular provisions for pension and severance, disability fund, Company car. Mr. Lifshitz' termination terms were approved by our HR & Compensation Committee and our Board of Directors on January 31, 2021, and February 8, 2022, respectively. As part of his termination arrangement, our HR & Compensation Committee and Board of Directors, approved to extend Mr. Lifshitz' advance notice period by 3 months (to a total |
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| (7) | Mrs. Tal-Ktalav’s employment agreement provides that: (a) Mrs. Tal-Ktalav’s base salary may be updated twice a year according to the rise in the Consumer Price Index in the months that passed since the previous |
| (8) | Mr. Aharonson's employment agreement provides that: (a) Mr. Aharonson´s base salary may be updated twice a year according to the rise in the Israeli Consumer Price Index in the months that passed since the previous update. Mr. Aharonson´s monthly base salary, as of December 31, 2021, was approximately NIS 115,000 (approximately $36,000); (ii) the employment agreement is for an unlimited period and may be terminated by either party at any time by advance written notice; (iii) Mr. Aharonson is entitled to an advance notice period of six months; (iv) Mr. Aharonson is entitled to a six month adjustment period if his employment is involuntary terminated during the first two years of his employment, and (v) Mr. Aharonson is entitled to all benefits customary in the Company, such as regular provisions for pension and severance, disability fund, Company car and gross up . For details regarding Mr. Aharonson's annual bonus in 2021, see the Annual Bonus Component section below. The equity-based compensation (LTI) amount in the above table reflects the expense that was recognized by the Company for Mr. Aharonson’s LTI in the Company's 2021 Financial Statements. |
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The Annual Bonus Component
On January 31, 2022, February 46, 2022 and 5, 2019,February 8, 2022, our HR & Compensation Committee and Board of Directors, respectively, approved anthe annual bonusbonuses to officerour office holders for the year 2018,2021, including to the top-five earners in 20182021 among ICL’s senior officers, in accordance with the Company’s Compensation Policy.
The remaining 20% of the year (KPIs), at a rate of 50%, and according toCEO's STI target will be measured based on a qualitative evaluation by the HR & compensation committee and the Board of Directors after receiving a recommendation of the CEO’s performance made byExecutive Chairman of the Board, at a rateBoard. The maximum payout for this component cannot exceed the higher of 50%. 3 three base monthly salaries or 25% of total actual STI payout.
The CEO’s target bonus represents the complete satisfaction (100%) bymaximum STI payout for the CEO of all annual targets. Accordingpursuant to the Company's compensation policy,Compensation Policy cannot exceed, for any given year, the lower of 130% of the CEO's target bonus may be up to 120% of his annual salary.STI for such year or $1.5 million. Mr. Zoller's actual target bonusSTI, as determined in his employment agreement is NIS 2,500 thousand2.5 million (approximately $667 thousand)$781,000).
Raviv Zoller's STI for 2021: Mr. Zoller's annual STI for 2021 was calculated in accordance with the CEO STI formula described above. Mr. Zoller's STI payout for 2021 was NIS 3.25 million (approximately $1 million) and reflects a combined performance of 130% with respect to all of his formula components.
Kobi Altman's STI for 2021: Mr. Altman's STI payout for 2021 was NIS 1.49 million (approximately $468,000) and reflects a weightcombined performance of 50%104. The first sub-factor is the outcome1% with respect to all of the reported adjusted net profit for the relevant year (subject to further adjustments, if any, as approved by the HR & Compensation Committee and the Board), divided by the average reported adjusted net profit in the three preceding years. The second financial sub-factor is the outcome of the reported adjusted operating profit for the relevant year (subject to further adjustments, if any, as approved by the Compensation Committee and the Board), divided by the average reported adjusted operating profit in the three preceding years. In 2018, no further adjustments were made by the Compensation Committee and the Board beyond those in this Annual Report to the reported adjusted net and\or operating profit, as reported in the annual financial statements. Thehis formula components. This payout was determined based on ICL’s adjusted net income and adjusted operating income are not calculated in accordance with IFRS, but areIncome against budget (30% weight), other measurable financial and non-financials goals against budget (40% weight) and a qualitative evaluation of Mr. Altman's performance during 2021 (30% weight).
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Ofer Lifshitz' STI for 2021: Mr. Lifshitz' STI payout for 2021 was NIS 1.36 million (approximately $427,000) and reflects a combined performance of 110.1%. This payout was determined based uponon ICL’s adjusted net income and operating income pursuant to IFRS, which areagainst budget (30% weight), other measurable financial and non-financials goals against budget (40% weight) and a qualitative evaluation of Mr. Lifshitz' performance during 2021 (30% weight).
Mrs. Tal-Ktalav's STI for 2021: Mrs. Tal-Ktalav's STI payout for 2021 was NIS 1.19 million (approximately $375,000) and reflects a combined performance of 118.7%. This payout was determined based on ICL’s adjusted for certain items, as set forth in the Company's compensation policy. For details regarding the adjustments made to the Company's net income and operating income in 2018, see "Item 5 - Operatingagainst budget (30% weight), Other measurable financial and Financial Reviewnon-financials goals against budget (40% weight) and Prospects– A. operating results– Adjustments to Reported Operating and Net Income (Non-GAAP Financial Measures)"a qualitative evaluation of Mrs. Tal-Ktalav's performance during 2021 (30% weight).
Mr. Aharonson's STI for 2018 to our President & CEO,2021: Mr. Raviv Zoller's, reflectsAharonson's STI payout for 2021, for the outcome of implementationrespective portion of the Annual Bonus Calculation Formula with respect to the actual termyear he had worked in ICL in 2018, as approved by our HR & Compensation Committee and Board of Directors on February 4 and 5, 2019, respectively. Mr. Zoller's pro-rated target bonus for the relative portionCompany, was NIS 0.89 million (approximately $285,000) and reflects a combined performance of 2018 or NIS 1,582 thousand (approx. $422 thousand)114.1%. This payout was determined based on ICL’s adjusted net income and operating income against budget (30% weight), was multiplied by ICL'sOther measurable financial factor in 2018 (0.97),and then updated according to a good performance of his KPIs, as were determined in the beginning of 2018 for the former acting CEO, Mr. Asher Grinbaumnon-financials goals against budget (40% weight) and to an exceptional performance fora qualitative evaluation of his performance. The HR & Compensation Committee and Board of Directors noted in their decision that Mr. Zoller successfully entered into the role of ICL's President & CEO, while showing an impressive learning curve in understanding ICL's business, as well as leadership, capabilities and involvement in the Company's business. Accordingly, the annual bonus payout to Mr. Zoller for 2018, is NIS 1,958 thousand (approximately $523 thousand).
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C. BOARD PRACTICES
Board of Directors
According to our Articles of Association, we must have no less than seven and no more than twenty directors.directors on our Board of Directors (including our external directors). Our directors (other than our external directors) are normallytypically elected by our shareholders at our annual meeting.general meeting of shareholders. Our Board of Directors is also authorized to appoint directors in order to fill vacancies or for any other reason. Each of our directors, other than our external directors, serves from the date of election or appointment until our next annual meeting of the shareholders. According to our Articles of Association, athe majority of the membersour Board of our BoardDirectors must be both citizens and residents of Israel. The approval of at least a majority of the voting rights represented at a shareholders’ meeting and voting on the matter is generally required to remove any of our directors from office (other than external directors as detailed below).
As of the date of this Annual Report, our Board of Directors consists of teneleven directors. In the event of equal votes of our Board of Directors, our Chairman of the Board has the right to cast the deciding vote. Mr.
Dr. Miriam Haran and Ms. Dafna Gruber serve as “external directors” according to the Companies Law. Messrs. Lior Reitblatt is anand Gadi Lesin and Ms. Tzipi Ozer Armon qualify as independent director,directors, as defined in the Israeli Companies Law, 5759-1999 (the “Companies Law”).Law. Board members Ms. Ruth Ralbag,Mses. Tzipi Ozer Armon, Miriam Haran and Dafna Gruber, as well as Messrs. Nadav Kaplan,, Reem Aminoach, and Lior Reitblatt areand Gadi Lesin qualify as independent directors under the rules applicable to U.S. companies listed on the NYSE. Board members Messrs. Johanan Locker, Avisar Paz,Yoav Doppelt, Aviad Kaufman, Sagi Kabla, Avisar Paz and Ovadia Eli and Yoav Doppelt are not considered independent directors by virtue of the positions they hold, or previously held, with our controlling shareholder's group or with the Company. Dr. Nadav Kaplan Ms. Ruth Ralbag are “external directors” according to the Companies Law.group. We do not have service contractsagreements with our current directors, excluding our Executive Chairman of the Board, Mr. Johanan Locker.Yoav Doppelt.
Board Composition
Board Effectiveness Review
In 2020-2021, our board of directors underwent an evaluation of the business effectiveness of the board's work, which was conducted by one of the big four global accounting firms, pursuant to which the external consultants pointed out opportunities for improvement in relation to the best global practice in the field. The process included a review of the background materials and minutes of the board's discussions, interviews with a variety of company directors and officers, anonymous questionnaires to the board members regarding work practices, etc. The effectiveness assessment was done in accordance with a global methodology, and in relation to best practices and international corporate governance standards. According to such methodology the results of the assessment indicated a very high maturity level of the board of directors. The board of directors analyzed the findings of the assessment and the opportunities for improvement and created, with the assistance of the external consultants, and in collaboration with the Company and corporate secretariat, a mitigation plan for improvement of the effectiveness. Most of the items were already implemented or are in working progress.
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Following the external process for evaluating the effectiveness as described above, the board decided to adopt a tool that will allow it to independently self-assess its effectiveness over time. The tool was designed together with the abovementioned external firm and combines both business focus and comparison with leading global practices, while managing resources efficiently to achieve actual results. In February 2022 the board of directors launched the periodical review.
New Directors On-boarding & Directors' Trainings
The Company has a tailored and robust onboarding program for new directors, aimed to familiarize the new directors with key topics, ranging from the board’s structure, governance and responsibilities, the Company’s organizational structure, the Company’s strategic objectives and key performance indicators (KPIs), the Company’s business environment and market overview, financial reporting, legal proceedings, etc. The program is formalized and tailored to take into account the unique backgrounds, experiences and expected committee responsibilities of each new director. The program includes an educational effort of the Company's public disclosures, including website, regulatory filings and governance documents investor presentations, annual and long-term budget materials, etc. In addition, we schedule meetings for the new directors with other directors, key executives and business leaders to gain business insights about the Company, and the culture of the board and how it operates. Additional onboarding activities (such as site visits) are calendared throughout the year to foster an ongoing onboarding program.
The board operates according to annual and long-term plans, which include, among other things, trainings on various issues (such as climate change, sustainability, governance, compliance, HR & people trends, etc.), in addition to educational sessions on the business environment, our products, competition view, etc.
External Directors
As a public Israeli company, we are required by the Israeli Companies Law to have at least two external directors who meet certain independence criteria to ensure that they are not related parties to the Company or to our controlling shareholder. The definition of an “external director” or "independent director" under the Companies Law and the definition of an “independent director” under the NYSE rules are very similar, and thus, that we would generally expect a director who qualifies as one to also qualify as the other. However, since the definitions provided in Israeli law and U.S. law are not identical, it is possible for a director to qualify as one but not necessarily as the other.
An external director is required to have either financial and accounting expertise or professional qualifications, as defined in the relevant regulations promulgated under the Companies Law, and at least one of the external directors is required to have financial and accounting expertise. Our external directors, Ms. Ruth RalbagDafna Gruber and Dr. Nadav Kaplan,Miriam Haran, have financial and accounting expertise as defined in the Regulations. An external director is entitled to reimbursement of expenses and compensation as provided in the Compensation Regulations promulgated under the Companies Law but is otherwise prohibited from receiving any other compensation from us, directly or indirectly, during his or her term of office and for two years thereafter.
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Under the Companies Law, external directors must be elected at a shareholders’ meeting by a simple majority of the votes cast, provided that anyeither of the following conditions is met: that(i) such majority includes a majority of the votes cast by non‑controlling shareholders and shareholders who do not have a personal interest in the election (excluding a personal interest that did not result from the shareholder’s relationship with the controlling shareholder), excluding abstentions, or that(ii) the votes cast by suchnon-controlling shareholders and shareholders who do not have a personal interest in the election opposing the election (excluding a personal interest that did not result from the shareholder’s relationship with the controlling shareholder) did not exceed 2% of our aggregate voting rights. Generally, external directors may serve for up to three terms of three years each, and as a company whose shares are traded on the NYSE, our Audit and Accounting Committee and Board of Directors may nominate themexternal directors for additional three-year terms under certain circumstances.circumstances for election by the shareholders by the same majority required for election of an external director as described above. Even if an external director is not nominated by our Board of Directors for reelection for a second or third term, an external director may be nominated for reelection for up to two additional three year terms, by (i) one or more shareholders holding at least 1% of our voting rights have the right to nominate(provided the external director foris not an "affiliated or competing shareholder", or a relative of such a shareholder, at the time of the appointment, and is not "affiliated" with such a shareholder at the time of the appointment or within the two years preceding the date of appointment, as such terms are defined in the Companies Law). In such circumstances, the reelection and in addition,of the external director may nominate himself for reappointment. In such a case, the reelection can be approved withoutrequires the approval of our controlling shareholder if it is approvedshareholders by a majority of the votes cast by non‑controlling shareholders and shareholders who do not have a personal interest in the election (excluding a personal interest that did not result from the shareholder’s relationship with the controlling shareholder)shareholder and excluding abstentions) and the votes cast by such shareholders approving the electionreelection must exceed 2% of our aggregate voting rights.rights; and (ii) the external director him or herself, in which case the election by the shareholders is by the same majority required for the initial election of an external director, as described above. The term of office of an external director may be terminated prior to expiration only by a shareholder vote, by the same threshold required for election, or by a court, but in each case only if the external director ceases to meet the statutory qualifications for election or if the external director breaches his duty of trust to us.
Under the Companies Law, each committee of the Board of Directors that exercises power of the Board of Directors must include at least one external director and all external directors must be members of the Company’s Audit Committee and Compensation Committee, as further detailed below.Committee.
As of the date of this report,Annual Report, we have two external directors: Ms. Ruth Ralbag,Dr. Miriam Haran, whose first three-year term commenced on July 14, 2021, and Ms. Dafna Gruber, whose first three-year term commenced on January 10, 2018 and Dr. Nadav Kaplan, whose first term commenced on August 20, 2018. On February 26, 2018, Mr. Yaacov Dior ceased serving as an external director of the Company, after completing two three-year terms in the Company and on August 29, 2018, Dr. Miriam Haran ceased serving as an external director of the Company, after completing three three-year terms in the Company.27, 2022.
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Financial Experts
Our Board of Directors has resolved that at least three of its members must have financial and accounting expertise, as this term is defined in the Regulationsregulations promulgated under the Companies Law. Our Board of Directors has further determined, that, based on qualification statements delivered to the Company, seventhat nine out of our teneleven serving directors meet the said expertise requirements.requirements (For further details see “Item 6 - Directors, Senior Management and Employees — A. Directors and Officers”.
In addition, our Board of Directors has determined that all members of our Audit and Accounting Committee are financially literate for purposes of meeting the NYSE rules and that Ms. Ralbag and Messrs. Kaplan and Reitblatt are qualified to serve as “Audit Committee Financial Experts” as defined by SEC rules.
Alternate Directors
Our Articles of Association, consistent with Israeli law, provide that any director may appoint another person who is not a director or serving as an alternate director (or, in the case of an alternate director for a member of a committee of the Board of Directors, another director, provided the alternate director does not serve as a member of such committee) to serve as his alternate director, subject to the approval of the Board of Directors. A person who is not qualified to be appointed as an independent director, pursuant to the Companies Law, may not be appointed as an alternate director of an independent director qualified as such under the Companies Law. The term of an alternate director can be terminated at any time by the appointing director or the Board of Directors and automatically terminates upon the termination of the term of the appointing director. The Companies Law stipulates that an external director may not appoint an alternate director except under very limited circumstances. An alternate director has the same rights and responsibilities as a director, except for the right to appoint an alternate director. No alternate director was appointed during the reported period.period.
Our Board Committees
Our Board of Directors has established the following Committees,committees, which operate in accordance with written charters or procedures that set forth, among other things, such committee’s structure, manner of operations, qualification and membership requirements, responsibilities and authority of the committee,authorities, etc.
Audit and Accounting Committee
Under the Companies Law, the Board of Directors of a public company must establish an Audit Committee. The Audit Committee must consist of at least three directors who meet certain independence criteria and must include all of the Company’s external directors. The Chairman of the Audit Committee is required to be an external director. The responsibilities of an Audit Committee under the Companies Law include identifying and addressing flaws in the business management of the Company, reviewing and approving interested party transactions, establishing whistleblower procedures, overseeing the Company’s internal audit system and the performance of its Internal Auditor,internal auditor, and assessing the scope of the work and recommending the fees of the Company’s independent accounting firm. In addition, the Audit Committee is required to review and determine whether certain actions and transactions with a controlling shareholder or with a company officer are “material” or “extraordinary” and whether they are negligible according to the approval procedures required under the Companies Law and company procedures.Company procedures.
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In accordance with U.S. law and the NYSE requirements, our Audit and Accounting Committee is also responsible for the appointment, compensation and oversight of the work of our independent auditors. In accordance with such laws and rules and with the Israeli Companies Law and regulations promulgated thereunder, the Audit and Accounting Committee is also responsible for assisting our Board of Directors in monitoring our financial statements, the effectiveness of our internal controls and our compliance with legal and regulatory requirements.
As of the date of this report,Annual Report, our Audit and Accounting Committee consists of threefour directors, and also includescomposed of our two external directorsdirectors: Dr. Miriam Haran (Chairman until May 2022), Ms. Dafna Gruber (will replace Dr. Haran as Chairman as of May 2022), and ourtwo independent director, as follows: Ms. Ruth Ralbag (Chairman, external director), Dr. Nadav Kaplan (external director) anddirector: Mr. Lior Reitblatt (independent director).and Mr. Gadi Lesin. In addition to meeting the requirements of Israeli law, our Audit and Accounting Committee also complies with the requirements applicable to U.S. companies that are listed on the NYSE and with SEC rules. All members of our Audit and Accounting Committee members are also independent directors as thissuch term is defined in SEC rules and the NYSE listing requirements. Our Board of Directors has determined that all the members of the Audit and Accounting Committee are financially literate as provided in the NYSE rules and that Dr. Haran, Ms. RalbagGruber and Messrs. KaplanReitblatt and Reitblatt are qualified to serveLesin qualify as “audit committee financial experts” as defined by SEC rules.
Human Resources and Compensation Committee
Under the Companies Law, the Board of Directors of a public company must establish a Compensation Committee. The Compensation Committee must consist of at least three directors who meet certain independence criteria and include all of the Company’s external directors, who are required to constitute a majority of its members. The Chairman of the Compensation Committee must be an external director. The members of the Compensation Committee are remunerated for their service in accordance with the regulationsCompensation Regulations governing the compensation of external directors. The responsibilities of a Compensation Committee under the Companies Law include: recommending to the Board of Directors a policy governing the compensation of company officers and directors based on specified criteria, recommending to the Board of Directors, from time to time, updates to update such compensation policy and reviewing its implementation; deciding whether to approve transactions respectingwith respect to the terms of office and employment of officers and directors which require approval by the compensation committee under the Companies Law, including approving, under certain circumstances, an exemption from shareholder approval byof the General Meeting,terms of a candidate for chief executive officer who meets certain non-affiliation criteria, in accordance with the provisions of the Companies Law.Law.
Our HR &Compensation& Compensation Committee also oversees the Company's bonus and equity plans, evaluation of top management and employees, succession planning and so forth.forth.
Our HR & Compensation Committee consists of three directors, and includescomposed of our two external directorsdirectors: Dr. Miriam Haran (Chairman), Ms. Dafna Gruber, and ourone independent director, as follows: Dr. Nadav Kaplan (Chairman, external director), Ms. Ruth Ralbag (external director), and Mr. Lior Reitblatt (independent director).Reitblatt. All members of our HR & Compensation Committee members are also independent directors as thissuch term is defined in the NYSE listing requirements and SEC rules.rules.
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Safety, Environment, SafetyClimate, Diversity, Inclusion and Public Affairs Committee
Our Safety, Environment SafetyClimate, Diversity, Inclusion and Public Affairs Committee is not a statutory committee, and is designed to assist our Board of Directors in fulfilling its responsibilities respectingwith respect to oversight of our safety, environment, and safetyclimate related risks and opportunities policies and programs, our community outreach programs and public relations and advocacy. Our Environment, Safetyadvocacy and Public Affairsdiversity and inclusion aspects in the Company. This Committee is not authorized to exercise any power of our Board of Directors. ItDirectors and has advisory authority only. The committee consists of fourfive directors: Dr. Miriam Haran (Chairman), an environmental expert, whom is also the responsible director for diversity and inclusion issues on behalf of the Board of Directors, Mr. Reem Aminoach, (Chairman), Dr. Nadav Kaplan, Mr. Ovadia Eli, Mr. Sagi Kabla and Mr. Sagi Kabla.Gadi Lesin.
Operations Committee
Our Operations Committee is not a statutory committee and is designed to assist our Board of Directors in fulfilling its responsibilities with respect to business operations and strategy implementation, including reviewing M&A transactions and research and development strategy. Our Operations Committee is not authorized to exercise any power of our Board of Directors.Directors and has advisory authority only. The committee consists of sixseven directors: Mr. Johanan LockerYoav Doppelt (Chairman), Mr. Avisar Paz, Mr. Sagi Kabla, Mr. Ovadia Eli, Mr. Reem Aminoach, Mr. Lior Reitblatt and Mr. Lior Reitblatt.Gadi Lesin.
Financing Committee
Our Financing Committee is not a statutory committee, and its purpose is to assist our Board of Directors in fulfilling its responsibilities with respect to our financing and equity management and operations, including loans, equity offerings, hedging, debt and other financing vehicles. Our Financing Committee is not authorized to exercise any power of our Board of Directors. As of the date of this report, theDirectors and has advisory authority only. The Financing Committee consists of four directors: Mr. Avisar PazSagi Kabla (Chairman), Mr. Sagi Kabla,Avisar Paz, Mr. Aviad Kaufman and Ms. Ruth Ralbag.Mr. Lior Reitblatt.
Internal Auditor
Under the Companies Law, a Company’sthe Board of Directors of a public company is required to appoint an Internal Auditor pursuant to the recommendation of the Audit Committee. The role of the Internal Auditor is to examine, among other things, whether the Company’s actions comply with applicable law, companyCompany procedures and proper business procedures. Under the Companies Law, the Internal Auditor may not be an interested party (as defined in the Companies Law), a director or an officer of the company,Company, or a relative of any of the foregoing, nor may the Internal Auditor be the company’sCompany’s independent accountantauditor or a representative thereof. The Internal Auditor oversees the work of various internal auditors acting on his behalf throughout the organization.
As of the time of this report,Annual Report, our Internal Auditor is Mr. Amir Meshulam, a certified public accountant in Israel, holds an LLB from the College of Management and is a member of the Israel Bar. His education, skills and experience were among the Board of Directors’ considerations in approving the appointment. Mr. Meshulam has served in this position since August 2018, replacing Mr. Shmuel Daniel, who served2018. He is a Company employee, and reports to the Executive Chairman of the Board of Directors.
Our Internal Auditor oversees the work of various internal auditors acting on his behalf throughout the organization.
He acts in accordance with the defined Internal Audit Charter and obligated to comply with IIA Standards. He holds periodical meetings with the Audit Committee, without management present, as often as deemed necessary, and at least once a year. In addition, the Internal Auditor holds monthly meetings with our previousExecutive Chairman of the Board and with the Chairman of the Audit Committee.
The internal auditor since August 2014,audit's annual and has leftmulti-year work plans are risk-based plans. They have been designed based on retirement. Mr. Meshulam appointment wasa global risk assessment, and were examined against industry standards and benchmark. The plans are reviewed and approved by the Audit Committee and the Board of Director's on May 9, 2018, after receivingDirectors. In addition, a high-level risk assessment is carried out annually and the Audit Committee's recommendation from May 8, 2018.audit plan is reassessed and approved.
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Insurance and indemnification
| The Articles of Association of the Company and its Israeli subsidiaries include provisions that permit exemption, indemnification and insurance of the liability of officers, all in accordance with the provisions of the |
The Company, with the approval of the HR & Compensation Committee, the Board of Directors and the General Meeting of the shareholders, granted its officers ana letter of exemption and letters of indemnification, and also hasmaintains an insurance policy covering directorsdirectors' and officers.officers' liability. The directors' and officers' liability insurance and the exemption and indemnity undertaking do not apply to those cases specified in Section 263 of the Israeli Companies Law. The exemption relates to damage caused and/or will be caused, by those officers as a result of a breach of the duty of care to the Company. Regarding directors who are office holders of Israel Corp., who may serve from time to time, on January 5, 2021, the General Meeting of the shareholders approved to extend the period for exemption and indemnification entered into with such office holders, for an additional 9 years, commencing November 30, 2020, provided that the exemption shall not apply to liabilities arising in connection with a transaction or resolution in which a controlling shareholder or an office holder, including an office holder who is other than the office holder party to the agreement, has a personal interest. The amount of the indemnification payable by the Company under the letter of indemnification, in addition to amounts received from an insurance company, if any, for all of the officers on a cumulative basis, for one or more of the events detailed therein, is limited to $350$300 million. The insurance is renewed annually.annually.
D&O Framework Transaction
On September 14, 2017, ourJanuary 30, 2020, the Company’s shareholders approved the Company's engagement in directors and officers insurance policies, as a three-year framework agreement.transaction which enables the Company to purchase, from time to time, directors’ and officers’ liability insurance policies for a two tier coverage of directors’ and officers’ liability, including a joint tier with Israel Corp., beginning February 1, 2020 (the "Framework Transaction"). The insurance policies under the framework agreementFramework Transaction include a joint primary tier with Israel Corp. with a joint liability cap of up to $20 million, and a separate tier covering the Company alone, with a liability cap of up to $200$330 million, forwith a total liability limit of $220up to $350 million for both tiers. Under the terms of the framework resolution, ourOur directors and officers are beneficiaries of both tiers. Pursuant to the framework agreement,Framework Transaction, the cost of the annual premium shall not exceed a cap of $10 million for both tiers. The division of the premium amount between the Company and Israel Corp. in the joint tier is that 70% are 80% to be paid by the Company and 30%20% by the Israel Corp. According to the approval of the general meeting of our shareholders,Corp, and the HR & Compensation Committee and the Board of Directors will have the authority to approve changeschange, from time to time, in connection with the rate of the premium distribution between the ICL Group and the Israel Corporation Groupallocation in respect of the joint tier as recommended bybetween the companies, according to the recommendation of the insurers and/or brokers, and provided that the new rate of the premium distributionsuch changes will not exceed 25% over the entire transaction period. Deviation from these limits shall require shareholder approval. In accordance with the shareholders approval. On December 4 and 5, 2017, the Audit & Accounting Committee and Board of Directors approved the renewalterms of the insurance policy, onFramework Transaction and the basis ofCompany's Compensation Policy, the framework agreement, for an additional year beginning on January 1, 2018,Company's directors’ and until December 31, 2018, with an annual premium of $900,000, which is within the maximum premium amount specified in the framework resolution.
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Other Information
We didhave not engageengaged in any arrangements with directors providing for benefits upon termination of employment, with the following exceptions: (1) Mr. Yoav Doppelt's current termination arrangements include continued vesting of LTI grants for a period of 12 months following termination of employment. Notwithstanding the foregoing, subject to the approval by our shareholders at the Annual General Meeting expected to take place on March 30, 2022, of Mr. Doppelt's amended terms of compensation, as well as the Company's new compensation policy, in casethe event of termination of employer-employee relations, Mr. Johanan LockerDoppelt's term of office as Executive Chairman of the Board, he will be entitled to a bonus atsix-month adjustment period and six month advance notice period, during both of which he will continue to be entitled to all of his compensation terms, including STI payouts and continued vesting of his existing LTI plans. In addition, Mr. Doppelt will be entitled to an amountadditional severance payment by the Company, in addition to the mandatory severance payment, equal two timesto his last monthly salary multiplied by the number of his years of servicethat he was employed by the Company, serving as ICL’sits Executive Chairman of the Board and(i.e., as of July 1, 2022); (2) In accordance with the Equity Plan, the board members' vesting of the Restricted Shares would fully accelerate if the holder thereof ceases to serve as a director of the Company, unless he ceased to hold office due to those certain circumstances regarding early termination of office or imposition of enforcement measures, as set forth in section 231-232a and 233(2) of the Israeli Companies Law.
Number of meetings and average attendance rate of the meetings of ICL Board of Directors and its permanent committees
| Number of meetings in reported year | Average Attendance | |
| Board of Directors | 18 | 94% |
| Audit & Accounting Committee | 10 | 97% |
| HR & Compensation Committee | 7 | 100% |
| Financing Committee | 3 | 80% |
| Operations Committee | 2 | 83% |
| Safety, Environment, Climate, Diversity, Inclusion and Public Affairs Committee | 3 | 100% |
Number of meetings in reported year | Average Attendance | |
| General Board Meetings | 16 | 97% |
| Audit & Accounting Committee | 13 | 91% |
| Financing Committee | 4 | 100% |
| Operations Committee | 4 | 92% |
| Compensation Committee | 11 | 100% |
| Environment Committee | 4 | 94% |
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D. EMPLOYEES
As atof December 31, 2018, we had a2021, our workforce of 12,125includes 13,233 employees.
Breakdown of Employees by Segments
2021 | 2020 | 2019 |
| Phosphate Solutions | 5,259 | 5,533 | 6,274 | 4,608 | 4,601 | 4,867 |
| Potash | 2,855 | 3,109 | 3,196 | 2,498 | 2,491 | 2,541 |
| Industrial Products | 1,675 | 1,697 | 1,710 | |||
Industrial Product | 1,595 | 1,654 | 948 | |||
| Innovative Ag Solutions | 1,182 | 1,163 | 1,081 | 2,406 | 994 | 1,651 |
| Global functions and headquarters | 1,154 | 1,158 | 1,253 | 1,162 | 1,092 | 1,083 |
Sub Total | 12,269 | 10,832 | 11,090 | |||
Temporary employees | 964 | 912 | 1,027 | |||
| Total employees | 12,125 | 12,660 | 13,514 | 13,233 | 11,744 | 12,117 |
Geographic Breakdown of Employees
2021 | 2020 | 2019 |
| Israel | 4,672 | 4,673 | 4,861 | 4,462 | 4,401 | 4,507 |
| China | 2,467 | 2,413 | 2,816 | 1,977 | 2,048 | 2,064 |
| Spain | 1,179 | 1,281 | 1,294 | 872 | 868 | 892 |
USA | 772 | 716 | 720 | |||
| Germany | 860 | 1,012 | 1,157 | 670 | 697 | 858 |
| UK | 659 | 836 | 827 | 676 | 670 | 658 |
| USA | 728 | 817 | 895 | |||
| Netherlands | 627 | 626 | 639 | 578 | 584 | |
| Brazil | 276 | 280 | 264 | 1,644 | 259 | 262 |
| France | 125 | 125 | 127 | 122 | 117 | 119 |
| Other | 532 | 597 | 634 | |||
All other | 496 | 426 | 523 | |||
Sub Total | 12,269 | 10,786 | 11,187 | |||
Temporary employees | 964 | 912 | 1,027 | |||
| Total employees | 12,125 | 12,660 | 13,514 | 13,233 | 11,698 | 12,214 |
As atof December 31, 2018,2021, the Company’s workforce comprised 12,125of 13,233 employees, compared to 12,66011,744 employees as atof December 31, 20172020 – a decreasean increase of 5351,489 employees. The said decrease derivesThis increase is mainly from a decrease in the number of employees in the UK, due to the ceased productionacquisitions of potash in Fertiláqua and ADS.
ICL Boulby mine and a shift to sole production of Polysulphate; in Germany - mainly as a result of the sale of the Fire Safety and Oil Additives (P2S5) in BKG, as well as the sale of the Rovita business; in the US - as a result of sale of the Fire Safety Business and Oil Additives (P2S5), mainly in ICL North America ; in Spain - as a result of the sale of the Fire Safety and Oil Additives (P2S5), mainly in Auxquimia SA.Group Limited 223
Employment Agreements, Collective Bargaining Agreements and Temporary Employees
Senior employees in Israel serving in special positions and members of management are employed under individualpersonal agreements. These agreements are not limited in time and may be terminated with advance notice of a few months.
A small number of employees at ICL’s sites in Israel are employed bythrough employment agencies for short terms. In addition, we have contracted in Israel with subcontractors for various outsourcing services such as security, packaging, maintenance projects, catering, cleaning, and other services. In accordance with thea decision received on October 2004 by ICL's Board of Directors and its Israeli subsidiaries,in 2004, contractors who employ workers at ICL’s plants in Israel are required to give more than the salary terms required by law toprovide their employees working on a regular basiswho permanently work for ICL. Pursuant to this decision, the employers are obligated to grant these employees, in addition to a current salary that must be at least 5% higher than the minimum wage stipulated by law,ICL holiday gifts and other benefits such as uniforms and meals.
Employees of ICL’s subsidiaries outside of Israel are employed according to the employment terms prevailing in the countries in which they are employed. Significant number of the overseas employees, primarily in China, Germany, the Netherlands, the United Kingdom, Spain, and the United States, are employed under collective agreements and/or arrangements.
Under Chinese labor law, it is a mandatory requirement for employers to enter into individualpersonal labor contractcontracts with their employees. As such, the permanent staff of YPH JV shall beare employed under respective individualpersonal labor contracts. However, under PRC law, employees have the right to establish a labor union to represent their interests and protect their legal rights. YPH JV has a labor union. The labor union may represent employees in negotiating with their employer for collective agreements regarding remuneration, working hours, work safety, etc. Such collective agreements are mainly used for providing a benchmark for certain working conditions.
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Promoting Diversity, Inclusion & Belonging (DIB)
At ICL diversity means understanding, accepting, and valuing differences between people including those of different races, nationalities, religions, gender, ages, disabilities, sexual orientations, and ethnicities, and those with differences in education, personalities, experiences, and knowledge bases.
Inclusion means embracing colleagues who look, act and, importantly, think differently.
We view belonging as a human need, genetically wired in each one of us.
With all our differences, becoming stronger together
As part of our Employer of Choice journey, we have committed to becoming a more inclusive and attentive organization.
One of the key milestones in this important journey is to commit to ICL’s Diversity and Inclusion (D&I) policy, first formulated in 2020, that will strengthen ICL’s direction and provide a measurement for this area.
As part of this process we appointed a Global ICL D&I officer. The new role includes responsibility for supporting the Companyannouncedby developing a D&I culture and improving ICL’s D&I measures. We also launched a dedicated and interactive online intranet, (MyCampus), to inform and educate employees on diversity, inclusion and belonging issues.
Initiating Global Membership Catalyst
One of the key milestones in this important journey is to commit to ICL’s Diversity and Inclusion (D&I) policy, first formulated in 2020, that will strengthen ICL’s direction and provide a measurement for this area.
As part of this process we appointed a Global ICL D&I officer. The new role includes responsibility for supporting the Company
Initiating Global Membership Catalyst
Catalyst is a global non-profit organization working with some of the world’s leading CEOs and companies to help build workplaces that it is oneare appropriate for women. With ICL’s membership, each of 230 public companies worldwide includedour employees have access to world-class resources that support individual career growth, inclusive leadership skill building, and organizational change efforts at www.catalyst.org.
Educational offerings
During each of our employees’ journey, they will learn to understand their biases and how to change their way of thinking to act in an inclusive way.
To achieve this goal, we offer virtual sessions on Unconscious Bias, Understanding Privilege and Cultural Awareness, in addition to short knowledge bursts (e-learning) on “Leading Your Team in an Inclusive Manner” or “Running More Inclusive Meetings”.
To achieve this goal, we offer virtual sessions on Unconscious Bias, Understanding Privilege and Cultural Awareness, in addition to short knowledge bursts (e-learning) on “Leading Your Team in an Inclusive Manner” or “Running More Inclusive Meetings”.
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Global DIB@ICL ambassadors
40 of our employees around the world have enrolled to become ‘Diversity, Inclusion and Belonging Ambassadors’. ICL’s ambassadors amplify initiatives developed for the organization.
DIB@ICL Statistics and Trends
Each quarter detailed statistics and trends are produced to help ICL focus on those areas that can contribute the most when addressed.
Talent Development and Learning
Shifts in the 2019 Bloomberg Gender-Equality Index (GEI). The GEI distinguishes companies committedworld of work and increasing worker expectations are driving organizations to transparencyapproach talent, development and learning in reporting gender policy and advancing gender equality. The GEI includes public companies that score above a globally-established threshold, based on transparency and their policies. The 2019 GEI includes firms from ten sectors headquartered across 36 countries and regions. Collectively,more integrated way. Supported by the firms have a combined market capitalizationoutcome of $9 trillion and employ more than 15 million people,the Employer of which 7 million are women. ICL is the only Israeli company included in the index,Choice, as well as the only company among its majorby a global peerssurvey to measure employee engagement and enablement, we introduced several initiatives during 2021 in learning and development.
ICL’s effective leadership is in the specialty chemicalscore of our business and fertilizers sectors.implemented in all our development offerings. With the ICL Leadership Model, we seek to embrace the key qualities and capabilities of an ICL leader, demonstrating and cultivating “Care, Dare, Grow, and Winning Spirit” – wherever they are and whatever they do. The model is designed in the shape of ICL’s logo to reflect the fact that our leadership model is at the heart of who we are as a company.
From MyCampus@ICL to WeGrow@ICL
Although we maintain the broadly accepted and popular “MyCampus@ICL” platform for learning offerings (primarily for our global events calendar overview and depth information for processes like performance management and ICLeaders), in 2021 we introduced the next generation of learning at ICL. “WeGrow@ICL” is open source, its curated content is powered by AI and based on an up-to-date skills profile that provides real-time insights about workforce skills, beyond their role (role-based skills, personal skills, and strategic, company-wide skills). With WeGrow@ICL we are not only enabling our employees to take their development into their own hands, but we also enable them to upskill, reskill and redefine their roles to better align with their future needs.
Bloomberg’s 2022 Gender-Equality Index (GEI)
We strive to promote equality at all ICL's facilities worldwide and committed to ongoing transparency and developing a diverse and inclusive workforce.
We’re pleased to be one of the 418 companies included in Bloomberg’s 2022 Gender-Equality Index and provide our investors and other stakeholder a greater disclosure around our investments in gender-related practices and policies.
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E. SHARE OWNERSHIP
| August 6, 2014 | Officers and senior employees | 922 | 3 equal tranches: (1) One third on December 1, 2016 (2) One third on December 1, 2017 (3) One third on December 1, 2018 | An issuance for no consideration, under the 2014 Equity Compensation Plan, to 450 ICL officers and senior employees in Israel and overseas. | The value of the restricted shares was determined according to the closing price on the TASE on the most recent trading day preceding the grant date (the date approval of the BOD and/or the date of the approval of the General Meeting where required). | 8.4 |
| December 11, 2014 | Former CEO | 86 | An issuance for no consideration, under the 2014 Equity Compensation Plan. | |||
| February 26, 2015 | ICL’s Directors (excluding ICL's CEO) | 99 | 3 tranches: (1) 50% will vest August 28, 2015 (2) 25% will vest February 26, 2017 (3) 25% will vest February 26, 2018 | An issuance for no consideration, under the 2014 Equity Compensation Plan, to 11 ICL Directors. | 0.7 | |
| May 12, 2015 | Officers and senior employees | 1,194 | 3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date | An issuance for no consideration, under the 2014 Equity Compensation Plan, to 550 ICL officers and senior employees in Israel and overseas. | 9.7 | |
| June 29, 2015 | Former CEO | 90 | An issuance for no consideration, under the 2014 Equity Compensation Plan. | |||
| Former Chairman of the BOD | 68 | |||||
| December 23, 2015 | ICL’s Directors (excluding ICL's CEO & Chairman of the BOD) | 121 | 3 equal tranches: (1) One third on December 23, 2016 (2) One third on December 23, 2017 (3) One third on December 23, 2018 | An issuance for no consideration, under the 2014 Equity Compensation Plan, to 8 ICL Directors. | 0.5 |
| June 30, 2016 | Officers and senior employees | 990 | 3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date | An issuance for no consideration, under the 2014 Equity Compensation Plan, to 90 ICL officers and senior employees in Israel and overseas. | The value of the restricted shares was determined according to the closing price on the TASE on the most recent trading day preceding the grant date (the date approval of the BOD and/or the date of the approval of the General Meeting where required). | 4.8 |
| September 5, 2016 | Chairman of the BOD | 55 | An issuance for no consideration, under the 2014 Equity Compensation Plan. | |||
| Former CEO | 185 | |||||
| January 3, 2017 | ICL’s Directors (excluding ICL's Chairman of the BOD) | 146 | An issuance for no consideration, under the 2014 Equity Compensation Plan, to 8 ICL Directors. The value includes a reduction of 5% from the value of the equity compensation, pursuant to the decision of the directors in March 2016, to reduce their annual compensation for 2016 and 2017. | 0.6 | ||
| February 14, 2017 | Former CEO | 38 | An issuance for no consideration, under the 2014 Equity Compensation Plan. | 0.2 | ||
| June 20, 2017 | Officers and Senior employees | 2,211 | An issuance for no consideration, under the 2014 Equity Compensation Plan, to 494 ICL officers and senior employees in Israel and overseas. | 10 | ||
| August 2, 2017 | Chairman of BOD | 53 | An issuance for no consideration, under the 2014 Equity Compensation Plan. | 0.3 | ||
| January 10, 2018 | ICL’s Directors (excluding ICL's CEO & Chairman of the BOD) | 137 | An issuance for no consideration, under the 2014 Equity Compensation Plan, to 7 ICL Directors. | 0.6 |
| March 6, 2018 | Officers and senior employees | 1,726 | 3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date | An issuance for no consideration, under the 2014 Equity Compensation Plan (as amended). | The value of the restricted shares was determined according to the closing price on the TASE on the most recent trading day preceding the grant date (the date approval of the BOD and/or the date of the approval of the General Meeting where required). | 8 |
| May 14, 2018 | CEO | 121 | 0.6 | |||
| August 20, 2018 | Chairman of BOD | 47 | 0.2 | |||
| ICL’s Directors (excluding ICL's CEO & Chairman of the BOD) | 88 | Acceleration at January 2019. | 0.4 |
Share-based payments to employees
For additional information regarding the share-based payments to the Company's employees in the form of non-marketable options and restricted shares of the Company, and for information regarding under the amended 2014 Equity Compensation Plan and the grants in prior years made under the said Plan, see Note 2119 to our Audited Financial Statements.
For information with respect to share ownership of members of our Management and Supervisory Boards and our senior management see “Item 7 - Major Shareholders and Related (and Interested) Party Transactions”.
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A. MAJOR SHAREHOLDERS
The following table presents, as of February 26, 201821, 2022 (unless otherwise noted below),*** the beneficial ownership of our ordinary shares by each person who is known by us to be the beneficial owner of 5% or more of our outstanding ordinary shares and each of our directors and executive officers. The data presented is based on information provided to us by the holders or disclosed in public regulatory filings.
The number of ordinary shares beneficially owned by each entity, person, executive officer or director is determined in accordance with the rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares over which the individual has sole or shared voting power or investment power as well as any shares that the individual has the right to acquire within 60 days through the exercise of any option, warrant or other right. Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all common shares held by that person.
Unless otherwise indicated below, the address for each beneficial owner is c/o ICL Group Ltd., Millennium Tower, 23 Aranha Street, P.O. Box 20245 Tel Aviv, 6120201, Israel.
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Ordinary Shares Beneficially Owned(1) | Special State Share | |||
| Shareholders | Number | % | Number | % |
Israel Corporation Ltd.(2) | 587,178,761 | 45.86%** | - | - |
State of Israel(3) | - | - | 1 | 100% |
| Johanan Locker | 155,369 | * | - | - |
| Avisar Paz | - | * | - | - |
| Aviad Kaufman | - | * | - | - |
| Sagi Kabla | - | * | - | - |
| Ovadia Eli | 79,199 | * | - | - |
| Nadav Kaplan | 20,553 | * | - | - |
| Lior Reitblatt | 95,553 | * | - | - |
| Reem Aminoach | 36,703 | * | - | - |
| Ruth Ralbag | 36,703 | * | - | - |
| Yoav Doppelt | 15,381 | * | - | - |
| Raviv Zoller | 120,919 | * | - | - |
| Kobi Altman | 211,703 | * | - | - |
| Lilach Geva Harel | - | * | - | - |
| Ilana Fahima | - | * | - | - |
| Rani Lobenstein | 30,190 | * | - | - |
| Charles Weidhas | 171,065 | * | - | - |
| Ofer Lifshitz | 131,108 | * | - | - |
| Eli Glazer | 163,979 | * | - | - |
| Noam Goldstein | 55,327 | * | - | - |
| Anat Tal-Ktalav | 55,327 | * | - | - |
| Amir Meshulam | 20,793 | * | - | - |
Israel Corporation Ltd.(2) | 587,178,758 | 45.62%** | - | - |
State of Israel(3) | - | - | 1 | 100% |
Migdal Insurance & Financial Holdings Ltd. (4) | 78,034,267 | 6.06% | - | - |
Harel Insurance Investments & Financial Services Ltd. (5) | 67,348,503 | 5.23% | - | - |
| Yoav Doppelt | 15,381 | * | - | - |
| Avisar Paz | 16,926 | * | - | - |
| Aviad Kaufman | - | * | - | - |
| Sagi Kabla | - | * | - | - |
Ovadia Eli(6) | 86,380 | * | - | - |
Lior Reitblatt(7) | 53,629 | * | - | - |
Reem Aminoach(8) | 53,629 | * | - | - |
Tzipi Ozer Armon(9) | 16,220 | * | - | - |
| Gadi Lesin | - | * | - | - |
| Miriam Haran | 53,289 | * | - | - |
| Dafna Gruber | - | * | - | - |
| Raviv Zoller | - | * | - | - |
| Aviram Lahav | - | * | - | - |
Lilach Geva Harel(10) | 422,535 | * | - | - |
Ilana Fahima(11) | 422,535 | * | - | - |
Eli Amon(12) | 344,454 | * | - | - |
| Nitzan Moshe | - | * | - | - |
Anantha Desikan(13) | 379,644 | * | - | - |
Noam Goldstein(14) | 561,972 | * | - | - |
Anat Tal-Ktalav(15) | 721,387 | * | - | - |
Amir Meshulam(16) | 147,888 | * | - | - |
Miri Mishor(17) | 189,825 | * | - | - |
| Chris Millington | - | * | - | - |
| Elad Aharonson | - | * | - | - |
| Meir Mergi | 33,356 | * | - | - |
*Less than 1%
** For additionalfurther information, please see section (2) below.
| (1) | The percentages shown are based on 1,287,150,942 ordinary shares issued and outstanding as of February 22, 2022 (after excluding shares held by us or our subsidiaries). In accordance with SEC rules, beneficial ownership includes voting or investment power with respect to securities and includes the shares issuable pursuant to options that are exercisable within 60 days of the date of February 22, 2022. Shares issuable pursuant to options are deemed outstanding for computing the percentage of the person holding such options but are not considered outstanding for computing the percentage of any other person. |
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| (2) | Israel Corp. is a public company listed for trading on the Tel Aviv Stock Exchange (TASE). Based on the information provided by Israel Corp., Millenium Investments Elad Ltd. (“Millenium”) and Mr. Idan Ofer are considered as controlling shareholders jointly of Israel Corp., for purposes of the Israeli Securities Law (each of Millenium and Mr. Idan Ofer hold shares in Israel Corp. directly, and Mr. Idan Ofer serves as a director of Millenium and has an indirect interest in it as the beneficiary of the discretionary trust that has indirect control of Millenium, as stated below). Millenium holds approximately 44.44% of the share capital in Israel Corp., which holds as of December 31, 2021 approximately 45.62% of the voting rights and approximately 44.76% of the issued share capital, of the Company. |
To the best of Israel Corp.’s knowledge, Millenium is held by Mashat Investments(Investments) Ltd. (“Mashat”) and by XT Investments Ltd. (“XT Investments”), with 80%84.73% and 20%15.27% holding rates in the issued share capital, respectively. (It is noted that Mashat granted XT Investments a power of attorney for a fixed period (which is extendable) to vote according to XT's discretion at General Meetings of Millenium in respect of shares constituting 5% of the voting rights in Millenium). Mashat is wholly owned by Ansonia Holdings Singapore B.V. (“Ansonia”) which is incorporated in the Netherlands.. Ansonia is a wholly owned subsidiary of Jelany Corporation N.V. (registered in Curaçao), which is a wholly owned subsidiary of a Liberian company,by Court Investments Ltd. (“Court”). Court is wholly owned by a foreign discretionary trust, in which Mr. Idan Ofer is the beneficiary. XT Investments is fully heldwholly owned by XT Holdings Ltd. (“XT Holdings”), a company whose. To the best of Israel Corp.’s knowledge, ordinary shares of XT Holdings are held in equal shares by Orona Investments Ltd. (which is indirectly controlled by Mr. Ehud Angel) and by Lynav Holdings Ltd. ("Lynav"), a company thatwhich is controlled by a foreign discretionary trust in which Mr. Idan Ofer is the beneficiary. Mr. Ehud Angel holds, among other things, a special share that grants him, inter alia, under certain limitations and for certain issues, an additional vote on the Board of Directors of XT Holdings. Lynav also holds directly 1.25% of the issued share capital of Israel Corp. In addition, Kirby Enterprises Inc., which is to the best of Israel Corp.’s knowledge, indirectly held by the same trust that holds Mashat, in which, as stated, Mr. Idan Ofer is the beneficiary, holds approximately 0.74% of the issued share capital of Israel Corp.Corp.. Furthermore, Mr. Idan Ofer holds directly approximately 3.85% of the issued share capital of Israel Corp.
As of December 31, December 2018, 1412021, 184 million ordinary shares have been pledged by Israel Corporation to secure certain liabilities, almost entirely comprised of margin loans with an aggregate outstanding principal amount of $260$314 million.
| (3) | For a description of the different voting rights held by the holder of the Special State Share, see “Item 10 - Additional Information— B. Memorandum, Articles of Association and Special State Share — The Special State Share.” |
| (4) | Based solely upon and qualified in its entirety with reference to a Schedule 13G filed by Migdal Insurance & Financial Holdings Ltd. (“Migdal”) with the SEC on February 2, 2022. According to the Schedule 13G, of the 78,034,267 Ordinary Shares reported as beneficially owned by Migdal (i) 78,034,267 Ordinary Shares are held for members of the public through, among others, provident funds, mutual funds, pension funds and insurance policies, which are managed by direct and indirect subsidiaries of Migdal, each of which subsidiaries operates under independent management and makes independent voting and investment decisions, (ii) 5,574,849 Ordinary Shares are held by companies for the management of funds for joint investments in trusteeship, each of which operates under independent management and makes independent voting and investment decisions, and (iii) 0 are beneficially held for their own account (Nostro account). |
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| (5) | Based solely upon and qualified in its entirety with reference to Amendment No.1 to Schedule 13G filed by Harel Insurance Investments & Financial Services Ltd. (“Harel”), with the SEC on January 31, 2022. According to the Schedule 13G, of the 67,348,503 Ordinary Shares reported as beneficially owned by Harel (i) 63,307,104 Ordinary Shares are held for members of the public through, among others, provident funds and/or mutual funds and/or pension funds and/or index-linked securities and/or insurance policies, which are managed by subsidiaries of the Reporting Person, each of which subsidiaries operates under independent management and makes independent voting and investment decisions, (ii) 1,682,923 Ordinary Shares are held by third-party client accounts managed by a subsidiary of Harel as portfolio managers, which subsidiary operates under independent management and makes independent investment decisions and has no voting power in the securities held in such client accounts, and (iii) 2,358,476 Ordinary Shares are beneficially held for their own account (Nostro account). |
| (6) | Includes 77,917 ordinary shares and 8,463 ordinary shares subject to options that are currently exercisable or will be exercisable within 60 days of the date of the table. |
| (7) | Includes 45,166 ordinary shares and 8,463 ordinary shares subject to options that are currently exercisable or will be exercisable within 60 days of the date of the table. |
| (8) | Includes 55,018 ordinary shares and 289,436 ordinary shares subject to options that are currently exercisable or will be exercisable within 60 days of the date of the table. |
| (9) | Includes 8,110 ordinary shares and 8,110 ordinary shares subject to options that are currently exercisable or will be exercisable within 60 days of the date of the table. |
| (10) | Includes 422,535 ordinary shares subject to options that are currently exercisable or will be exercisable within 60 days of the date of the table. |
| (11) | Includes 422,535 ordinary shares subject to options that are currently exercisable or will be exercisable within 60 days of the date of the table. |
| (12) | Includes 55,018 ordinary shares and 289,436 ordinary shares subject to options that are currently exercisable or will be exercisable within 60 days of the date of the table. |
| (13) | Includes 379,644 ordinary shares subject to options that are currently exercisable or will be exercisable within 60 days of the date of the table. |
| (14) | Includes 561,972 ordinary shares subject to options that are currently exercisable or will be exercisable within 60 days of the date of the table. |
| (15) | Includes 87,310 ordinary shares and 634,077 ordinary shares subject to options that are currently exercisable or will be exercisable within 60 days of the date of the table. |
| (16) | Includes 147,888 ordinary shares subject to options that are currently exercisable or will be exercisable within 60 days of the date of the table. |
| (17) | Includes 41,937 ordinary shares and 147,888 ordinary shares subject to options that are currently exercisable or will be exercisable within 60 days of the date of the table. |
CoB LTI: For information regarding the equity-based incentive grant to our Executive Chairman of the different voting rights heldBoard, Mr. Yoav Doppelt, for 2019-2021, in the form of options, approved by the holderGeneral Meeting of shareholders on May 29, 2019, see Note 19 to our Audited Financial Statements. For details regarding the Special State Share,new LTI grant for 2022-2024 in the form of options to Mr. Doppelt that was approved by our HR & Compensation Committee and Board of Directors on January 31, 2022 and February 6, 2022, and on February 8, 2022, respectively, subject to the approval of our shareholders at the annual general meeting expected to take place on March 30, 2022 (the "Meeting"), see “Description of Share Capital—The Special State Share” inNote 19 to our registration statement on Form F-1 (File no. 333-198711) filed with the SEC on September 22, 2014.Audited Financial Statements and “Item 6 - Directors, Senior Management and Employees— B. Compensation”
CEO LTI: For information regarding the equity-based incentive grant to our Chief Executive Officer, Mr. Raviv Zoller, for 2019-2021, in the form of options, approved by the shareholders on June 27, 2019, see Note 19 to our Audited Financial Statements. For details regarding the new LTI grant for 2022-2024 in the form of options to Mr. Doppelt that was approved by our HR & Compensation Committee and Board of Directors on January 31, 2022 and February 6, 2022, and on February 8, 2022, respectively, subject to the approval of our shareholders at the Meeting, see Note 19 to our Audited Financial Statements and “Item 6 - Directors, Senior Management and Employees— B. Compensation”.
Executive Officers LTI: For information regarding the equity-based grant in the form of options, granted in April 2019 to our executive office holders for the years 2019-2021, see Note 16 to our Audited Financial Statements. For details regarding the new LTI grant for 2022-2024 in the form of options to our executive officers, that was approved by our HR & Compensation Committee and Board of Directors on January 31, 2022 and February 6, 2022, and on February 8, 2022, respectively, see Note 19 to our Audited Financial Statements.
B. RELATED (AND INTERESTED) PARTY TRANSACTIONS
Approval of Related (and Interested) Party Transactions
Approval of Related (and Interested) Party Transactions
Under the Companies Law, an interested party transaction may be approved only if it is for the benefit of the company. A transaction that is not an extraordinary transaction in which a director or officer has a personal interest requires the approval of the Board of Directors, unless the Articles of Association of the company provide otherwise. Our Articles of Association provide that such a transaction, if it does not pertain to a director’s or officer’s compensation terms, may be approved by any of our Board of Directors, our Audit and Accounting Committee, a disinterested director or officer or a person authorized for this purpose by our Board of Directors. If the transaction is an extraordinary transaction, it must be approved by the Audit and Accounting Committee and the Board of Directors, and, under certain circumstances, by the shareholders of the Company. An “extraordinary transaction” is a transaction other than in the ordinary course of business, other than on market terms or that is likely to have a material impact on the company’s profitability, assets or liabilities.
Pursuant to the Companies Law, extraordinary transactions with thea controlling shareholder and extraordinary transactions in which a controlling shareholder has a personal interest, require the approval of the Audit Committee, or the Compensation Committee if such transaction is in connection with the terms of employment or service with the company, the Board of Directors and the shareholders of the company (unless a relief exists pursuant to the Israeli Relief Regulationrelief regulations concerning Related Parties Transactions)related parties transactions). The shareholder approval must be by a simple majority of all votes cast, provided that (i) such majority includes a simple majority of the votes cast by non‑controlling shareholders having no personal interest in the matter (excluding abstentions) or (ii) the total number of votes of shareholders mentioned in clause (i) above who voted against such transaction does not exceed 2% of the total voting rights in the company.company
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The Companies Law prohibits any director who has a personal interest in an extraordinary transaction from being present at the discussion and voting on such transaction in the Audit Committee or Board of Directors. Notwithstanding, a director who has a personal interest may be present at the meeting and vote on the matter if a majority of the directors or members of the Audit Committee have a personal interest in the approval of such transaction. If a majority of the members of the Board of Directors have a personal interest in the transaction, such transaction also requires shareholder approval.
Approval of Directors and Officer Compensation
Under the Companies Law, we are required to approve, at least once every three years, a compensation policy with respect to the terms of engagement of our directors and officers. Following the recommendation of our HR & Compensation Committee, the compensation policy must be approved by our Board of Directors and our shareholders. The shareholder approval must be by a simple majority of all votes cast, provided that (i) such majority includes a simple majority of the votes cast by non‑controlling shareholders and shareholders having no personal interest in the matter (excluding abstentions) or (ii) the total number of votes of shareholders mentioned in clause (i) above who voted against such transaction does not exceed 2% of the total voting rights in the company.company, which is referred to as the “Special Majority for Compensation.” In general, the compensation terms of directors, the Chief Executive Officer and any employee or service provider who is considered a controlling shareholder, as well as a relative of a controlling shareholder, must be approved separately by the HR & Compensation Committee, the Board of Directors and the Shareholders (unless a relief exists pursuant to the Israeli Relief Regulation concerning Related Parties Transactions). Generally, shareholder approval is not required for director compensation payable in cash up to the maximum amount set forth in the regulationsCompensation Regulations governing the compensation of external directors. Generally, the compensation terms of other officers who report directly to the Chief Executive Officer (who is not a director) require the approval of the HR & Compensation Committee and the Board of Directors, unlessprovided that the HR & Compensation Committee approvesmay approve an amendment to an existing arrangement of such an officer if it determines that therethe amendment is nonot material changecompared to the existing terms of the compensation, and if such possibility exists under the Compensation Policy.compensation.
According to the Companies Law, a compensation policy for a period exceeding three years requires approval by the Board once every three years, based on a recommendation of the Compensation Committee, as well as approval by the Generalgeneral meeting of shareholders by the Special Majority for Compensation.
On January 31, 2022 and February 6, 2022, our HR & Compensation Committee discussed and recommended the Board of Directors to approve, and on February 8, 2022, our Board of Directors approved, subject to shareholder approval at the annual general meeting of shareholders expected to take place on March 30, 2022, a new compensation policy for the Company (the "Meeting"). If approved by the shareholders at the Meeting, the New Compensation Policy shall be in effect as of shareholders.the date of the Meeting, for a period of three consecutive years.
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Related (and Interested) Party Transactions
Registration Rights Agreement
We entered into a registration rights agreement with Israel CorporationCorp. on September 12, 2014. We obtained shareholder approval of our entry into this agreement on May 8, 2014. This agreement provides for customary demand, piggyback and shelf registration rights and provides that we will perform various actions and comply with various requirements to facilitate and promote such registrations, as well as cover certain expenses of Israel CorporationCorp. in connection with any such registration.
Controlling Shareholder
As of December 31, 2018,2021, Israel Corporation holds approximately 45.86%44.76% of our outstanding ordinary shares and approximately 45%45.62% of the voting rights of our Shareholders.shareholders.
Israel CorporationCorp. exercises control over our operations and business strategy and has sufficient voting power to control many matters requiring approval by our Shareholders, including:
| Mergers or other business combinations; |
| Certain future issuances of ordinary shares or other securities; and |
| Amendments to our Articles of Association, excluding provisions of the Articles of Association that were determined by the Special State Share. |
However, Israel CorporationCorp. does not exercise control with respect to our compensation policy and interested party transactions, since these must be approved by a majority of our non-related shareholders.
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Joint Insurance
Management Fees to Controlling Shareholder
We have been payingpay our parent company, Israel Corporation,Corp., annual management fees for management services, which include service of board members and ongoing general consulting services, such as professional, financial, strategic, legal and managerial consulting.advice. The parties may agree to expand the management services to additional areas.
On November 9, 2020, November 11, 2020, and January 17, 2018,5, 2021, our Audit and Accounting Committee, and our Board of Directors approved, and on April 24, 2018, our General Meeting of shareholders, respectively, approved the renewedrenewal of the management services agreement effective retroactively as of January 1, 2018,2021, for an additional term of three years, expiring on December 31, 2020. 2023. According to the renewed management services agreement, the annual management fee to be paid to Israel CorpCorp. for each calendar year shall not exceed $1,000,000,continue to be $1 million plus VAT.VAT, payable on a monthly basis. Such amount includes the overall value of the cash and equity compensation for the service of our directors whomwho are office holdersoffice-holders of Israel Corp., (except for the separate compensation arrangement between the Company and any and all prior or other compensation arrangements relating to such directors were cancelled. In addition, the renewed agreement was amended so as to no longer include an increase of management fees to a threshold of $3.5 million plus VAT in case an executive chairmanour Executive Chairman of the Board, is appointed on behalf of Israel Corporation. All other provisions of the management agreement remained unchanged. According to the decision of the General Meeting ofMr. Yoav Doppelt, as approved by our shareholders thein May 2019, and as may be amended by shareholder approval from time to time). The Audit & Accounting Committee will continue to annually examine the reasonableness of the Management Feesmanagement fees paid in the previous year against the Management Servicesmanagement services actually provided by Israel CorpCorp. to the Company in the same year. On February 4Nevertheless, the Company and 25, 2019,Israel Corp. have agreed, subject to the Audit & Accounting Committee examinedapproval by the management services that were actually rendered in 2018 againstshareholders at the management feesannual general meeting of our shareholders expected to take place on March 30, 2022, of the amended compensation terms of Mr. Yoav Doppelt, the Executive Chairman of our Board of Directors, to terminate the Management Agreement effective as of July 1, 2022, following which directors who are office holders of Israel Corp. (other than Mr. Yoav Doppelt), namely Mr. Aviad Kaufman and Mr. Sagi Kabla, shall begin to be paid in that year and concluded that the fees were reasonable.Director Cash Compensation.
Relationships with Other Companies
Gas Purchase Agreement: For details regarding the Company's Board of Directors authorized to certain subsidiaries in Israel to purchase electricity from OPC Rotem (a company related to the Company’s controlling shareholder).
Other Immaterial Transactions in the Ordinary Course of which were classified by the Audit and Accounting Committee as transactionsBusiness: The Company further engages, from time to time, in theits ordinary course of business, immaterialin various transactions with related parties, such as purchase of marine transportations services, sale of products, purchase of raw materials for its operations, receipt of banking services, etc. We do not deem these transactions as material for the Company, they are not viewed as unusual in their nature or conditions and in market terms),they are all classified as "ordinary" transactions under Israeli law and approved by our Board of Directors:
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The table below sets forth certain income statement information with respect to balances of our related party transactions.
| For the year ended December 31 | |||
| 2021 | 2020 | 2019 | |
| $ millions | $ millions | $ millions | |
| For the year ended December 31 | |||
| 2018 | 2017 | 2016 | |
| $ millions | $ millions | $ millions | |
| Sales | 5 | 8 | 35 | 7 | 3 | 4 |
| Cost of sales | 19 | 97 | 113 | 6 | 3 | 8 |
| Selling, transport and marketing expenses | 7 | 8 | 7 | 13 | 7 | 10 |
| Financing expenses (income), net | 3 | (9) | - | (2) | (1) | |
| General and administrative expenses | 1 | 1 | 1 | 1 | ||
| Management fees to the parent company | 1 | 1 | 1 | 1 | ||
The table below sets forth certain balance sheet information with respect to balances of our related party transactions
As of December 31 | ||
| 2021 | 2020 | |
| $ millions | $ millions | |
| As at December 31 | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
| Other current assets | 40 | 35 |
| Other current liabilities | 4 | 2 |
| Other current assets | 28 | 38 |
| Other current liabilities | 7 | 191 |
For additionalfurther information regarding our related party transactions, see Note 2523 to our Audited Financial Statements.
Option Plans
For a description of the Option Plans see “Item 6 - Directors, Senior Management and Employees—E. Share Ownership”.
C. INTERESTS OF EXPERTS AND COUNSEL
Not Applicable.
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| A. | CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION |
The fixed operating costs for the years ended December 31, 2018, 20172021, 2020 and 20162019 amounted to approximately $2,188$2,465 million, $2,265$2,349 million and $2,304$2,316 million, respectively. The variable operating costs for the years ended December 31, 2018, 20172021, 2020 and 20162019 amounted to approximately $1,849$3,279 million, $2,524$2,492 million and $3,062$2,199 million, respectively.
See “Item 18 - Financial Statements”.
Business Concentration Law
On December 11,2013, the Law for Encouragement of Competition and Reduction of Business Concentration, 5774-2013 (the “Business Concentration Law"), was published,enacted, which includes, among other things, provisions requiring regulators authorized to grant rights in areas defined as essential infrastructure in Israel, to take into account considerations for encouraging industry‑wide competition and reducing business concentration in the overall economy prior to granting rights in public assets to private entities defined as high‑concentration entities. The Business Concentration Law sets forth a list of "rights", including authorization, license, concession or permit and a contract, and also includes a list of matters defined as an essential infrastructure, including areas in which we are engaged, such as quarrying, mining, water, etc. The list of high‑concentration entities was published in accordance with the criteria provided in the Business Concentration Law, and ICL and its main subsidiaries in Israel are included therein, as aforesaid. In our estimation, inclusion of the Company and its main subsidiaries in Israel in the list of high‑concentration entities is not expected to have a significant adverse effect on us and itsour financial results. However, in light of the frequent changes in the regulatory environment in Israel and the existing uncertainty regarding the manner of granting rights in natural resources in a manner other than that provided in current legal provisions, among other things in relation to the manner of granting a concession for minerals extraction from the Dead Sea in 2030, as well as in relation to the granting of phosphate mining licenses, under the provisions of the IsraeliIsrael Mining Ordinance, it is possible that our estimation will prove to be inaccurate.
Price Monitoring
The prices of fertilizer‑grade phosphoric acid for local Israeli customers are regulated under the Supervision of Prices for Commodities and Services Law 1996. The quantity of these products sold in Israel by the Phosphate Solutions segment is not material to ICL.ICL.
In the United States and Brazil, import of magnesium and magnesium alloys from China is subject to anti-dumping duties imposed in order to protect the local industry in these countries, which are the main markets in which ICL Magnesium sells its products.products, imports of magnesium and magnesium alloys from China are subject to anti-dumping duties.
ICL and some of its subsidiaries have been declared a monopoly in Israel in the following areas: potash, phosphoric acid, sulphuric acid, ammonia, chemical fertilizers, granular triple super phosphate fertilizers, phosphates, bromine and bromine compounds. Due to their having been declared monopolies, ICL and its subsidiaries are subject to limitations set forth in Chapter 4 of the Economic Competition Law, 1988 (formerly, Restrictive Business Practices Law, 1988), most significantly its prohibition on monopolies against abusing their positions as monopolies. In 20182021 and 20172020 approximately 4% and 3%5%, respectively of our revenue derived from Israeli sales and, therefore, in our estimation, and without derogating from the legal implications of the above-mentioned declaration, on the whole, the said declaration does not have a material impact on us. We also have an internal antitrust compliance program in place.
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Legal Proceedings
Tax Proceedings
Derivative Actions
| 1. |
| On January 10, 2018, an application for certification of a derivative action was filed by a shareholder of Oil Refineries Ltd. (“Bazan”) with the Tel Aviv-Yafo District Court, against former and current board members of Bazan, OPC Energy Ltd. OPC Rotem Ltd., OPC Hadera Ltd. and the Company, (hereinafter, jointly: the “Additional Companies”), and against Israel Corporation Ltd., Mr. Idan Ofer and Mr. Ehud Angel (the “Application”). |
The Application pertains to gas purchase transactions of the Company, Bazan and OPC, including the intercompany aspects thereof, which include a 2012 transaction involving Bazan for the purchase of natural gas from the Tamar gas field (the “Tamar Transaction”), as well as a transaction for the purchase of natural gas from Energean Israel Limited (the “Energean Transaction”). The Company’s engagement in the Energean Transaction was approved by the general meetingat a General Meeting of our shareholders on February 22, 2018.
Subsequently, the applicant will submit its closing arguments until March 15, 2022 and the Company will submit its closing arguments until June 1, 2022. The applicant will respond to the Company’s closing arguments until July 1, 2022.
Since the derivative motion was filed on behalf of Bazan, and the early stageapplicant didn’t include any specific amount of this proceeding,damages allegedly caused by the Company, it is challenging to provide an estimate with regard to the action’s chances and risks involved cannotrisks. However, we believe that as long as the factual and circumstantial settings that were provided to us by your company are correct and will be estimated. However, on the surface it seems thatproved in court, the Company has goodsolid defense arguments.arguments that can potentially dismiss the derivative motion.
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Other Claims
According to the announcement issued by the Company on May 10, 2017, ICL Europe Coöperatief U.A. (“ICL Europe”), a subsidiary of the Company, filed a Notice of Arbitration against the Federal Democratic Republic of Ethiopia ("Ethiopia") under the Agreement of Encouragement and Reciprocal Protection of Investments between |
| 2. | The Inter-Ministry Directors General Committee recommendations on the Haifa Bay: In connection with our subsidiary, Fertilizers & Chemicals (F&C), on April 26, 2021, the Inter-Ministry Directors General Committee published its recommendations on the Haifa Bay, which aim to promote and develop the Haifa Bay area and realize its potential by rezoning of the Bay and determining land designations that will enable the development of the area for the welfare of its residents and end all petrochemical industry and the fertilizers plants within a decade. The Committee recommended the establishment of a government team with the aim of negotiating with companies operating in the Haifa Bay, including F&C, in order to reach renewed agreements regarding the possibility of changing their operations in Haifa Bay, as part of the aforesaid land rezoning, by way of mutual collaboration and by trying to achieve the purpose of the engagement with them, and if possible, in a way that is as compatible as possible with the needs of the employees and the interests of the companies. In February 2022, the Company received a draft government decisions proposal regarding the advancement of a strategy for the development and promotion of Haifa Bay in Israel (hereinafter – the draft). |
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In accordance with the draft, it was suggested to decided, among other things, on the establishment of an inter-ministerial team to negotiate the outline for ceasing the industry’s activities in Haifa Bay with the relevant companies, including ICL and to impose on the Commissioner for Budgets to offer sources of funding for the entire project. In connection with the negotiations with ICL, it was proposed that the team deliberate with the Company on relocating the industrial activity to another site, as much as possible by 2025.
In light of the preliminary stage of the recommendations and since this is still a draft decision proposal, the Company is unable to assess the consequences and feasibility of the aforesaid
For information regarding significant claims and legal proceeding, which are pending against the Group, see Note 2018 to our Audited Financial Statements.
Dividend policy
On March 6, 2018February 12, 2020, our Board of Directors revisitedresolved to extend the Company's existing dividend distribution policy until further notice, such that was previously approved in May 2016, and resolved that in the years 2018 and 2019 our dividend distribution rate shall continue to constitute up to 50% of the Company's adjusted annual net profit (comparedprofit. According to our previous dividend distributionthe extended policy, dividends will be distributed at a payout ratio of up to 70%50% of annual adjusted net profit,income, as was in place until revised in May 2016). Our Board of Directors will revisit this policy upon conclusionexpected at the date of the said period.decision regarding the distribution, and subject to applicable law. In addition, dividends will be paid out inasmuch as declared by our Board of Directors and may be discontinued at any time. Such changes could include either a reduction in the amount orof the targeted dividend, or modification of the calculation formula.
All decisions respecting dividend distribution are made by our Board of Directors, which considers a variety of factors, including our profits, ability to pay our debt and obligations, investment plans, financial state and other factors, as applicable. The distribution of a dividend is not assured, and our Board of Directors may decide, at its sole discretion, at any time and for any reason, not to distribute a dividend, to reduce the rate thereof, to distribute a special dividend, to change the dividend distribution policy or to adopt a share buy-back plan.
B. SIGNIFICANT CHANGES
To the best of our knowledge, no significant changes have occurred since the date of our consolidated financial statements.statements, other than as disclosed in this Annual Report.
Item9 – THE OFFER AND LISTING
| A. | OFFER AND LISTING DETAILS |
Not applicable.
B. PLAN OF DISTRIBUTION
Not applicable.
C. MARKETS
Our ordinary shares are listed on the NYSE and on the TASE under the symbol “ICL.”
D. SELLING SHAREHOLDERS
Not applicable.
E. DILUTION
Not applicable.
F. EXPENSES OF THE ISSUE
Not applicable.
A. SHARE CAPITAL
As of December 31, 2018,2021, our authorized share capital consisted of 1,484,999,999 ordinary shares, par value NIS 1 per share, of which 1,304,890,7781,311,740,778 ordinary shares were issued and outstanding (including shares held by us or our subsidiaries), and 1 Special State Share, par value NIS 1 per share, issued and outstanding. All of our outstanding shares have been lawfully issuedand are fully paid. As of December 31, 2018,2021, 24,589,836 ordinary shares were held by us or our subsidiaries. Shares acquired by our subsidiaries prior to February 2000 have both economic rights and voting rights. However, in accordance with Israeli law, ordinary shares issued to our subsidiaries or purchased by our subsidiaries after February 2000 have economic rights but not voting rights. Shares held by us have no economic rights or voting rights. Therefore, out of the ordinary shares held by us or our subsidiaries as of December 31, 2021, 24,589,836 have no voting rights.
As of December 31, 2018,2021, an additional quantityamount of approximately 18.912 million ordinary shares were issuable upon the exercise of outstanding options granted to our officers and employees at a weighted average exercise price of approximately ILS 20.54 (about $5.48) NIS 16.87 (about $5.42) per share. The weighted average exercise price of the outstanding vested options is approximately ILS 18.53 (about $4.94) NIS 14.29 (about $4.59) per share. For additionalfurther information about the issuance of options and restricted shares to officers and senior employees and their exercise in 2017-2018, as well as the allocation of restricted shares to directors and approval of the issuance of restricted shares to directors,2020-2021, see Note 2119 to our Audited Financial Statements and “Item 6 - Directors, Senior Management and Employees— E. Share Ownership”.Statements.
In 2018,2021, approximately 0.716 million options under our equity compensation plans were exercised into approximately 5 million ordinary shares. In 2020, approximately 1 million options under our equity compensation plants were exercised into approximately 0.150.1 million ordinary shares. In 2016 and 2017, no2019, approximately 1 million options under our equity compensation plants were exercised.exercised into approximately 0.2 million ordinary shares.
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B. MEMORANDUM, ARTICLES OF ASSOCIATION AND SPECIAL STATESHARE
Our shareholders adopted the Articles of Association attached as Exhibit 3.2 to our registration statement on Form F-1 (File no. 333-198711) filed with the SEC on September 12, 2014.
We incorporate by reference into this Annual Report the description of our Amended and Restated Articles of Association, which became effective upon the closing of our IPOinitial public offering in the Unites States and listing on the NYSE, contained in our F-1 registration statement (File No. 333-198711) originally filed with the SEC on September 12, 2014, as amended.Exhibit 2.1 of this Annual Report. Such description sets forth a summary of certain provisions of our Articles of Association as currently in effect.
The Special State Share
The State of Israel holds a nontransferable Special State Share in ICL in order to preserve the State’s vital interests. Any change in the provisions of our Articles of Association relating to the rights attached to the Special State Share requires approval from the State of Israel. The Special State Share grants its holder the rights described below.
The sale or transfer of material assets of the Company (in Israel) or grantingthe grant of any other rights in the abovementionedsuch assets, not in the ordinary course of our business, whether in one transaction or in a series of transactions, shall be invalid. Unless it receivedinvalid, without the approvalconsent of the holder of the Special State Share, howwho may oppose thesuch a transfer of a material asset as stated above only if, in its opinion, such transfer is likely to harm one of the “State’s vital interests”"vital interests of the State" as such term is defined in the Article of Association and described below. Restrictions are also imposed on voluntary liquidation, mergers and reorganizations, excluding certain exceptions enumerated in our Articles of Association.
In addition, without the approvalconsent of the holder of the Special State Share, any acquisition or holding of 14% or more of our outstanding share capital is not valid. In addition, any acquisition or holding of 25% or more of our outstanding share capital (including an increase of holdings to 25%) is not valid without the approvalconsent of the holder of the Special State Share, even if in the past the approvalconsent of the holder of the Special State Share had been receivedobtained for ownership of less than 25%. Our Articles of Association set forth procedures required to be followed by a person who intends to acquire shares in an amount that would require the approval of the holder of the Special State Shares. A pledge over shares is treated like an acquisition of shares. As a condition to voting at any shareholders’shareholder meeting, each interested party in the Company, including a holder of 5% or more of our outstanding shares, will beis required to certify in writing that the voting power derived from the holding of shares does not require the approval of the holder of the Special State Share or that such approval has been obtained.
In addition to the aforesaid,above, the approvalconsent of the holder of the Special State Share is required for the ownership of any shares that grant their holder the right, ability or practical potential to appoint, directly or indirectly, 50% or more of our directors, and such appointments will not be valid as long as that approvalsuch consent has not been obtained.
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The holder of the Special State Share has the right to receive information from us, as provided in our Articles of Association. Our Articles of Association also provide that the holder of the Special State Share will use this information only to exercise its rights under the Articles of Association for purposes of protecting the State’s vital interests.
Our Articles of Association also impose a periodic reporting obligation on us for the benefit of the holder of the Special State Share, regarding all asset‑related transactions approved by our Board of Directors during the three months prior to the date of the report, any changes in share capital ownership and any voting agreements among the Company’s shareholders signed during that period.
The following are the “State’s vital interests” as defined in our Articles of Association for purposes of the Special State Share:
| ◾ | To preserve the character of the Company and its subsidiaries, ICL Dead Sea, ICL Rotem, Dead Sea Bromine Company, Bromine Compounds and Tami, as Israeli companies whose centers of business and management are in Israel. In our estimation, this condition is met. |
| ◾ | To monitor the control over minerals and natural resources, for purposes of their efficient development and utilization, including maximum utilization in Israel of the results of investments, research and development. |
| ◾ | To prevent acquisition of a position of influence in the Company or the foregoing Israeli subsidiaries by hostile entities or entities likely to harm the foreign and security interests of the State of Israel. |
| ◾ | To prevent acquisition of a position of influence in the Company or the foregoing Israeli subsidiaries or management of such companies, whereby such acquisition or management may create a situation of significant conflicts of interest likely to harm any of the vital interests enumerated above. |
Furthermore, our headquarters and the ongoing management and control over our business activities must be in Israel. The majority of the members of our Board of Directors must be citizens and residents of Israel. In general, meetings of our Board of Directors are to take place in Israel.
Other than the rights enumerated above, the Special State Share does not grant the holder any voting or equity rights.
The State of Israel also holds a Special State Share in the following ICL subsidiaries: ICL Dead Sea, Dead Sea Bromine Company, ICL Rotem, Bromine Compounds, Tami and Dead Sea Magnesium. The rights granted by these shares according to the Articles of Association of these subsidiaries are substantially similar to the rights enumerated above. The full provisions governing the rights of the Special State Share appear in our Articles of Association and in the Articles of Association of the said subsidiaries and are available for the public’s review. We report to the State of Israel on an ongoing basis in accordance with the provisions of our Articles of Association. Certain asset transfer or sale transactions that in our opinion require approval, have received the approval of the holder of the Special State Share.
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C. MATERIAL CONTRACTS
Except as otherwise disclosed in this Annual Report, we are not currently, and have not been in the last two years, party to any material contract, other than contracts entered into in the ordinary course of business. For additional information on divestitures currently in progress, see “Item 3 - Key Information— A. Selected Financial Data”.
D. EXCHANGE CONTROLS
There are currently no Israeli currency control restrictions on the paymentsremittance of dividends, interest or other distributionspayments with respect to our ordinary shares to non-residents of Israel or on the proceeds from the sale of the shares, except for the obligationshareholders who are subjects of Israeli residents to file reportscountries that are, or have been, in a state of war with the Bank of Israel regarding certain transactions. However, legislation remains in effect pursuant to which currency controls can be imposed by administrative action at any time..
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E. TAXATION
Israeli Tax Considerations
Taxation of Investors
The following are material Israeli income tax consequences to investors of acquiringwho acquire and disposingdispose of our ordinary shares. That which is stated below does not purport to be a comprehensive description of all the tax considerations that may be relevant to a particular person’s decision to acquire and/or dispose theof our ordinary shares.
Capital Gains Tax
Israeli law generally imposes a capital gains tax on the sale of capital assets by residents of Israel, as defined for Israeli tax purposes, and on the sale of capital assets located in Israel, including shares of Israeli companies, by non‑residents of Israel, unless a specific exemption is available or unless a tax treaty between Israel and the shareholder’s country of residence provides otherwise. The law distinguishes between real gain and inflationary surplus. The inflationary surplus is a portion of the total capital gain that is equivalent to the increase of the relevant asset’s purchase price which is attributable to the increase in the Israeli Consumer Price Index or a foreign currency exchange rate between the date of purchase and the date of sale. The real gain is the excess of the total capital gain over the inflationary surplus.
Israeli Residents
Generally, as of January 1, 2012, the tax rate applicable to capital gains derived from a sale of shares, whether listed on a stock market or not, is the regular corporate tax rate in Israel of 23%applicable for Israeli companies (23% since 2018) and 25% for Israeli individuals, unless such individual shareholder is considered a “significant shareholder” at any time during the 12‑month period preceding such sale, in which case the tax rate will beis 30%. A “significant shareholder” is defined as one who holds, directly or indirectly, including together with others, at least 10% of any means of control in the company. However, different tax rates will apply to dealers in securities. Israeli companies are subject to the corporate tax rate on capital gains derived from the sale of listed shares.shares.
As of January 1, 20182017, individual (foreign or Israeli) taxpayers having taxable income ofabove NIS 641,880 or above647,640 (for 2021) in a certain tax year will be subject to an additional tax payment at the rate of 3% on the portion of their taxable income for such tax year that is in excess of such threshold. For this purpose, taxable income includes inter alia taxable capital gains from the sale of our shares and taxable income from dividend distributions.distributions.
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Non‑Israeli Residents
Under the domestic tax law, non‑Israeli residents are generally exempt from Israeli capital gains tax on any gains derived from the sale of shares of Israeli companies publicly traded on a recognized stock exchange outside Israel, so long asprovided such shareholders did not acquire their shares prior to the company’s initial public offering and the gains did not derive from a permanent establishment of such shareholders in Israel. However, shareholders that are non‑Israeli corporations will not be entitled to such exemption if Israeli residents hold an interest of more than 25% in such non‑Israeli corporation or are the beneficiaries or are entitled to 25% or more of the revenues or profits of such non‑Israeli corporation, whether directly or indirectly.
In certain instances where our shareholders may be liable to Israeli tax on the sale of their ordinary shares, the payment of the consideration may be subject to the withholding of Israeli tax at the source.
In addition, pursuant to the Convention between the US Government of the United States of America and the Israeli government with respect to taxes on income, as amended, or the U.S.‑U.S.US Israel Tax Treaty, the sale, exchange or disposition of ordinary shares by a person who qualifies as a resident of the United States within the meaning of the U.S.‑U.S.US Israel Tax Treaty and who is entitled to claim the benefits afforded to such person by the U.S.‑U.S.US Israel Tax Treaty generally will not be subject to the Israeli capital gains tax unless such person holds, directly or indirectly, shares representing 10% or more of our voting power during any part of the 12‑12 month period preceding such sale, exchange or disposition, subject to particular conditions, or the capital gains from such sale, exchange or disposition can be allocated to a permanent establishment in Israel or is considered to be derived from or sale of Israeli real property interests for purposes of the U.S.‑Israel Tax Treaty. If a U.S.US.S. investor is not exempt from Israeli taxes under the U.S.‑Israel Tax Treaty, such U.S. investor may be subject to Israeli tax, to the extent applicable as described above; however, under the U.S.‑Israel Tax Treaty, such person may be permitted to claim a credit for such taxes against the U.S. federal income tax imposed with respect to such sale, exchange or disposition, subject to the limitations in the U.S. laws applicable to foreign tax credits. The U.S.‑Israel Tax Treaty does not relate to U.S. state or local taxes.
Taxation of Dividend Distributions
Israeli Residents
Israeli resident individuals are generally subject to Israeli income tax on the receipt of dividends paid on our ordinary shares, other than bonus shares (share dividends). The tax rate applicable to such dividends is 25% or 30% for a shareholder that is considered a significant shareholder at any time during the 12‑month period preceding such distribution. Dividends paid from income derived from Approved Enterprises or Benefited Enterprises are subject to withholding at the rate of 15%. Dividends paid from income derived from Preferred Enterprises are subject to withholding at the rate of 20%.
Israeli resident companies are generally exempt from tax on the receipt of dividends paid on our ordinary shares (excluding dividends paid from income derived from Approved or Benefited Enterprises).
As of January 1, 20182017, individuals (both foreign or Israeli) taxpayers having taxable income of above NIS 641,880 or above647,640 NIS (for 2021) in a certain tax year will be subject to an additional tax payment at the rate 3% on the portion of their taxable income for such tax year that is in excess such threshold.
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Non‑Israeli Residents
Non‑residents of Israel are subject to income tax on income accrued or derived from sources in Israel, including dividends paid by Israeli companies. On distributions of dividends other than stock dividends, income tax (generally collected by means of withholding) will generally apply at the rate of 25%, or 30% for a shareholder that is considered a significant shareholder (as defined above) at any time during the 12‑month period preceding such distribution, unless a different rate is provided in a treaty between Israel and the shareholder’s country of residence. Dividends paid from income derived from Approved or Benefited Enterprises are subject to withholding at the rate of 15%, or 4% for Benefited Enterprises in the Ireland Track. Dividends paid from income derived from Preferred Enterprises will be subject to withholding at the rate of 20%.
Under the U.S.‑Israel Tax Treaty, the maximum tax on dividends paid to a holder of ordinary shares who qualifies as a resident of the United States within the meaning of the U.S.‑Israel Tax Treaty is 25%. The treaty provides for reduced tax rates on dividends if (a) the shareholder is a U.S.USU.S. corporation holding at least 10% of our issued voting power during the part of the tax year that precedes the date of payment of the dividend and held such minimal percentage during the whole of its prior tax year, and (b) not more than 25% of the Israeli company’s gross income consists of interest or dividends, other than dividends or interest received from subsidiary corporations or corporations 50% or more of the outstanding voting shares of which is owned by the Israeli company. The reduced treaty rate, if applicable, is 15% in the case of dividends paid from income derived from Approved, Benefited or Preferred Enterprise or 12.5% otherwise.
Material U.S. Federal Income Tax Considerations for U.S. Holders
The following are material U.S. federal income tax consequences to the U.S. Holders described below of owning and disposing of our ordinary shares, but it does not purport to be a comprehensive description of all the tax considerations that may be relevant to a particular person’s decision to hold the ordinary shares. This discussion applies only to a U.S. Holder that holds the ordinary shares as capital assets for U.S. federal income tax purposes. In addition, it does not describe all of the tax consequences that may be relevant in light of a U.S. Holder’s particular circumstances, including alternative minimum tax consequences, any aspect of the provisions of the Internal Revenue Code of 1986, as amended (the “Code”) commonly known as the Medicare tax and tax consequences applicable to U.S. Holders subject to special rules, such as:
certain financial institutions; |
dealers or traders in securities that use a mark-to-market method of tax accounting; |
persons holding ordinary shares as part of a “straddle” or integrated transaction or persons entering into a constructive sale with respect to the ordinary shares; |
persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar; |
entities classified as partnerships for U.S. federal income tax purposes; |
tax exempt entities, “individual retirement accounts” or “Roth IRAs": |
Persons who acquired our ordinary shares pursuant to the exercise of an employee stock option or otherwise as compensation;
ICL Group Limited 247 persons that own or are deemed to own 10% or more of our stock by vote or value; or |
| persons holding our ordinary shares in connection with a trade or business conducted outside of the United |
If an entity that is classified as a partnership for U.S. federal income tax purposes owns ordinary shares, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships owning ordinary shares and partners in such partnerships should consult their tax advisers as to the particular U.S. federal tax consequences of owning and disposing of the ordinary shares.
This discussion is based on the Code, administrative pronouncements, judicial decisions, the U.S.-Israel Tax Treaty (the “Treaty”) and final and proposed Treasury regulations, changes to any of which subsequent to the date of this Annual Report may affect the tax consequences described herein.
For purposes of this discussion, a “U.S. Holder” is a person who, for U.S. federal income tax purposes, is a beneficial owner of ordinary shares and is:
a citizen or individual resident of the United States; |
a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state therein or the District of Columbia; or
an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source. |
U.S. Holders should consult their tax advisers concerning the U.S. federal, state local tax and non-U.S. consequences of owning and disposing of our ordinary shares in their particular circumstances.
This discussion assumes that we are not, and will not become, a passive foreign investment company, as described below.
Taxation of Distributions
Distributions paid on our ordinary shares, other than certain pro rata distributions of ordinary shares, will be treated as dividends to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Because we do not calculate our earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be reported to U.S. Holders as dividends. Subject to applicable limitations, dividends paid to certain non-corporate U.S. Holders may be taxable at the favorable tax rates applicable to “qualified dividend income”. Non-corporate U.S. Holders should consult their tax advisers regarding the availability of these favorable rates on dividends in their particular circumstances. Dividends will not be eligible for the dividends received deduction generally available to U.S. corporations under the Code. Dividends will generally be included in a U.S. Holder’s income on the date of receipt. Dividend income will include any amounts withheld by us in respect of Israeli taxes, and will be treated as foreign source income for foreign tax credit purposes. If any dividend is paid in NIS, the amount of dividend income will be the dividend’s U.S. dollar amount calculated by reference to the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. Holder should not be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. Holder may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt. Such gain or loss would generally be treated as U.S.-source ordinary income or loss.
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Subject to applicable limitations, some of which vary depending upon the U.S. Holder’s circumstances, Israeli taxes withheld from dividends on our ordinary shares will be creditable against the U.S. Holder’s U.S. federal income tax liability. The rules governing foreign tax credits are complex, and U.S. Holders should consult their tax advisers regarding the creditability of foreign taxes in their particular circumstances. In lieu of claiming a foreign tax credit, U.S. Holders may, at their election, deduct foreign taxes, including Israeli taxes, in computing their taxable income, subject to applicable limitations. An election to deduct foreign taxes instead of claiming foreign tax credits applies to all foreign taxes paid or accrued in the taxable year.
Sale or Other Taxable Disposition of Ordinary Shares
For U.S. federal income tax purposes, gain or loss realized on the sale or other taxable disposition of our ordinary shares will be capital gain or loss, and will be long term capital gain or loss if the U.S. Holder held the ordinary shares for more than one year. The amount of the gain or loss will equal the difference between the U.S. Holder’s tax basis in the ordinary shares disposed of and the amount realized on the disposition, in each case as determined in U.S. dollars. This gain or loss will generally be U.S. source gain or loss for foreign tax credit purposes. The deductibility of capital losses is subject to limitations.
Passive Foreign Investment Company Rules
In general, a non-U.S. corporation will be a “passive foreign investment company” (a “PFIC”) for any taxable year if (i) 75% or more of its gross income consists of passive income or (ii) 50% or more of the average quarterly value of its assets (generally determined on a quarterly basis) consists of assets that produce, or are held for the production of, passive income. For purposes of the above calculations, a non-U.S. corporation that directly or indirectly owns at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the other corporation. Passive income generally includes dividends, interest, rents, royalties and gains from transactions in commodities (other than certain active business gains from the sales of commodities).
Based on the manner in which we operate our business, we believe that we were not a PFIC for 2018.2021. However, because PFIC status depends on the composition and character of a company’s income and assets and the value of its assets from time to time, there can be no assurance that we will not be a PFIC for any taxable year.
If we were a PFIC for any taxable year during which a U.S. Holder held ordinary shares, gain recognized by a U.S. Holder on a sale or other disposition (including certain pledges) of the ordinary shares would be allocated ratably over the U.S. Holder’s holding period for the ordinary shares. The amounts allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge would be imposed on the resulting tax liability for each such taxable year. Further, to the extent that distributions received by the U.S. Holder in any distributiontaxable year in respect of ordinary shares in excess ofexceed 125% of the average of the annual distributions received by a U.S. Holder during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, those excess distributions would be subject to taxation in the same manner. Certain elections may be available that would result in alternative treatments (such as mark-to-market treatment) of the ordinary shares in the case that we were a PFIC for any taxable year.
If we were a PFIC for any taxable year during which a U.S. Holder owned ordinary shares, the U.S. Holder generally will be required to file annual reports on Internal Revenue Service Form 8621. In addition, the favorable tax rates described above with respect to dividends paid to certain non-corporate U.S. Holders would not apply if we were a PFIC for the taxable year of distribution or the preceding taxable year.
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Information Reporting and Backup Withholding
Payments of dividends and sales proceeds that are made within the United States or through certain U.S. related financial intermediaries generally are subject to information reporting, and may be subject to backup withholding, unless (i) the U.S. Holder is a corporation or other exempt recipient or (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding. Backup withholding is not an additional tax.
The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle it to a refund, provided that the required information is timely furnished to the Internal Revenue Service.
Certain U.S. Holders who are individuals (or certain specified entities) may be required to report information relating to their ownership of securities of non-U.S. issuers, such as our ordinary shares, unless the securities are held in accounts at financial institutions (in which case the accounts may be reportable if maintained by non-U.S. financial institutions). U.S. Holders should consult their tax advisers regarding their reporting obligations with respect to the ordinary sharesshares.
F. DIVIDENDS AND PAYING AGENTS
Not applicable.
G. STATEMENT BY EXPERTS
Not applicable.
H. DOCUMENTS ON DISPLAY
In light of the listing of our ordinary shares for trade on the New York Stock Exchange (NYSE) within the framework of an initial public offering executed in 2014, we are subject to the informational requirements of the US Securities Exchange Act of 1934. Accordingly, we are required to file or furnish reports and other information with the SEC pursuant to the requirements applying to foreign issuers, including annual reports on Form 20-F and reports on Form 6-K. The SEC maintains a website that contains reports and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov.
I. SUBSIDIARY INFORMATION
The Company and its subsidiaries do not maintain any direct or indirect connection with Iran or with enemy nations (as defined in the Israel Trade with the Enemy Ordinance - 1939).
Item 11 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Risk Management
In the ordinary course of our business activities, we are exposed to various market risks that are not atin our control, including fluctuations in the prices of certain of our products and inputs, currency exchange rates, interest rates, energy prices and marine shipping prices, that may have an adverse effect on the value of our financial assets and liabilities, future cash flows and profit. As a result of these market risks, we could suffer a loss due to adverse changes such as the prices of our products or our inputs, foreign exchange rates, interest rates, energy prices or marine shipping prices.
We regularly monitor the extent of our exposure and the hedging activities and rates for the various risks described below. Webelow and we execute hedging activities according to our hedging policy with reference to the actual developments and expectations in the various markets.markets.
We use financial instruments and derivatives for hedging purposes only. These hedging instruments reduce our exposure as described above. SomeMost of these transactions do not meet the hedging conditions provided in IFRS, and therefore they are measured at fair value, and changes in the fair value are charged immediately to earnings. The counterparties for our derivatives transactions are banks or financial institutes. We believe the credit risk in respect thereof is small.
For additionalfurther information about our hedging activities, see Note 2321 to our Audited Financial Statements.Statements.
Exchange Rate Risk
The U.S.US dollar is the principal currency of the business environment in which most of our subsidiaries operate. Most of our activities—activities — sales, purchase of materials, selling, marketing expenses and financing expenses, as well as the purchase of property, plant and equipment—equipment — are executed in U.S.US dollars, and, soas a result, we use the U.S.US dollar is used as theour functional currency for measurement and reporting of the Company and most of our subsidiaries.
We have several consolidated subsidiaries whose functional currencies are their local currency—mainlycurrency —mainly the euro, the British pound, the Brazilian real, the Israeli shekel and the Chinese yuan.
Set forth below is a description of our principal exposures in respect of changes in currency exchange rates.
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Transactions by our subsidiaries in currencies that are not their functional currency expose us to changes in the exchange rates of those currencies compared with the functional currencies of those companies. Measurement of this type of our exposure is based on the surplus of net income or expenses in each currency that is not the functional currency of that company.
Part of the costs of our inputs in Israel are denominated and paid in NIS. Thus, we are exposed to a strengthening of the NIS exchange rate against the U.S.US dollar (NIS revaluation)revaluation). This exposure is similar in substance to the exposure described above for transactions in foreign currencies but is much larger than the other currency exposures.
The results for tax purposes for the Company and its subsidiaries operating in Israel are measured in NIS. As a result, we are exposed to the rate of the change in the U.S.US dollar exchange rate and the measurement base for tax purposes (the NIS) in respect of these companies.
Our subsidiaries have severance pay liabilities that are denominated in the local currency, and in Israel they are sometimes also affected by rises in the CPI. Our subsidiaries in Israel have reserves to cover part of these liabilities. The reserves are denominated in NIS and affected by the performance of the funds in which the sums are invested. As a result, we are exposed to changes in the exchange rates of the U.S.US dollar against various local currencies in respect of net liabilities for severance pay. For further information regarding our hedging policy, see "Item 11 – Quantitative and Qualitative Disclosures about Market Risk– Risk Management".
Our subsidiaries have financial assets and liabilities that are denominated in or linked to currencies other than their functional currencies. A surplus of assets over liabilities denominated in currencies that are not the functional currency creates exposure for us in respect of exchange rate fluctuations.
For Investmentinvestment in subsidiaries whose functional currency is not the U.S.US dollar, the end of period balance sheet accounts of these subsidiary companies are translated into U.S.US dollars based on the exchange rate of the U.S.US dollar to the reporting currency of these companiessubsidiaries at the end of the relevant period. The beginning of period balance sheet balances, as well as capital changes during the period, are translated into U.S.US dollars at the exchange rate at the beginning of the period or on the date of the change in capital, respectively. The differences arising from the effect of the change in the exchange rate between the U.S.US dollar and the currency in which the subsidiary companies report create exposure. The effects of this exposure are charged directly to equity.
We examine periodically the extent of the hedging transactions implemented to hedge each of the exposures described above and decidesdecide on the required scope of the hedging within the hedging policy frame.framework. We use various financial instruments for our hedging activity, including derivatives.
Explanations of the main changes between the periods
Exchange rate:
As atof December 31, 2018,2021, the net positive fair value of the derivative instruments with respect to exchange rates was about $12$141 million, compared to a positive fair value of $63$97 million as atof December 31, 2017.2020. As a result, in 2018, an expense2021, income of about $51$44 million was recorded with respect to these transactions.
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Energy:
As atof December 31, 2018, the negative fair value of the2021, there are no derivative instruments with respect to energy costs was about $3 million compared to a positivenegative fair value of $2.2$0.5 million as atof December 31, 2017.2020. As a result, in 2018, an expense2021, the Company recorded income in the amount of about $5.2$0.5 million was recorded with respect to these transactions.
Dry bulk marine shipping:
As atof December 31, 2018,2021, the negativepositive fair value of the derivative instruments with respect to dry bulk marine shipping was about $2.3 million compared to a positive fair value$1.6 while as of $1.9 million as at December 31, 2017.2020 there were no derivative instruments. As a result, in 2018, an expense2021, income of about $4.2$1.6 million was recorded with respect to these transactions.
The tables below set forth the sensitivity of our derivative instruments and certain balance sheet items to 5% and 10% increases and decreases in the exchange rates as atof December 31, 2018.2021.
Increase (decrease) in fair value | Fair value | Increase (decrease) in fair value | |||
| USD/NIS | $ millions | $ millions | $ millions | $ millions | $ millions |
| Type of instrument | Increase of 10% | Increase of 5% | Decrease of 5% | Decrease of 10% | |
| Cash and cash equivalents | (0.2) | (0.1) | 1.8 | 0.1 | 0.2 | (0.3) | (0.1) | 3.1 | 0.2 | 0.3 |
| Short term deposits and loans | 0.0 | 0.1 | 0.0 | |||||||
| Trade receivables | (5.5) | (2.9) | 60.2 | 3.2 | 6.7 | (7.5) | (3.9) | 82.0 | 4.3 | 9.1 |
| Receivables and debit balances | (1.1) | (0.6) | 11.8 | 0.6 | 1.3 | (1.7) | (0.9) | 18.7 | 1.0 | 2.1 |
Long-term deposits and loans | (0.1) | (0.1) | 1.5 | 0.1 | 0.2 | |||||
| Credit from banks and others | 2.8 | 1.4 | (30.3) | (1.6) | (3.4) | |||||
| Trade payables | 24.1 | 12.6 | (265.1) | (14.0) | (29.5) | 37.2 | 19.5 | (409.7) | (21.6) | (45.5) |
| Other payables | 17.5 | 9.2 | (192.3) | (10.1) | (21.4) | 1.6 | 0.8 | (17.8) | (0.9) | (2.0) |
| Long-term loans | 6.6 | 3.5 | (73.0) | (3.8) | (8.1) | 17.3 | 9.1 | (60.3) | (10.0) | (21.1) |
| Fixed rate debentures (series E) | 38.8 | 20.3 | (426.8) | (22.5) | (47.4) | |||||
| Fixed rate debentures | 57.8 | 30.3 | (635.8) | (33.5) | (70.6) | |||||
| Options | (74.8) | (40.9) | (13.8) | 19.1 | 43.4 | (39.7) | (18.1) | 13.5 | 25.1 | 54.9 |
| Forward | (32.0) | (16.7) | 1.6 | 18.5 | 39.1 | (47.5) | (24.7) | 1.5 | 27.7 | 58.4 |
| Swap | (47.6) | (24.9) | 14.7 | 27.6 | 58.2 | (69.3) | (36.3) | 118.8 | 40.2 | 84.8 |
| Total | (71.5) | (39.2) | (909.6) | 17.2 | 39.3 | (52.1) | (24.3) | (886.0) | 32.5 | 70.4 |
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Increase (decrease) in fair value | Fair value | Increase (decrease) in fair value | |||
| EUR/USD | $ millions | $ millions | $ millions | $ millions | $ millions |
| Type of instrument | Increase of 10% | Increase of 5% | Decrease of 5% | Decrease of 10% | |
| Cash and cash equivalents | (1.9) | (1.0) | 21.3 | 1.1 | 2.4 | (2.1) | (1.1) | 22.8 | 1.2 | 2.5 |
| Short term deposits and loans | (0.2) | (0.1) | 2.7 | 0.1 | 0.3 | 0.0 | 0.2 | 0.0 | ||
| Trade receivables | (20.2) | (10.6) | 221.9 | 11.7 | 24.7 | (23.7) | (12.4) | 260.3 | 13.7 | 28.9 |
| Receivables and debit balances | (1.1) | (0.6) | 11.7 | 0.6 | 1.3 | (2.0) | (1.1) | 22.2 | 1.2 | 2.5 |
| Long-term deposits and loans | (0.1) | 1.1 | 0.1 | (0.3) | (0.2) | 3.6 | 0.2 | 0.4 | ||
| Credit from banks and others | 15.1 | 7.9 | (166.4) | (8.8) | (18.5) | |||||
| Trade payables | 17.1 | 8.9 | (187.6) | (9.9) | (20.8) | 19.7 | 10.3 | (216.3) | (11.4) | (24.0) |
| Other payables | 4.2 | 2.2 | (46.0) | (2.4) | (5.1) | 6.6 | 3.5 | (72.6) | (3.8) | (8.1) |
| Long-term loans from banks | 0.5 | 0.3 | (5.4) | (0.3) | (0.6) | 28.2 | 14.8 | (310.6) | (16.3) | (34.5) |
| Options | 4.6 | 2.1 | 1.3 | (1.8) | (3.7) | 5.6 | 2.7 | 1.7 | (2.4) | (5.0) |
| Forward | 9.5 | 4.5 | 2.5 | (4.1) | (7.7) | 22.1 | 11.0 | 4.3 | (11.0) | (22.1) |
| Swap | 33.6 | 16.8 | (1.0) | (16.8) | (33.6) | |||||
| Total | 61.1 | 30.3 | (143.9) | (30.5) | (61.2) | 54.1 | 27.5 | (284.4) | (28.6) | (59.4) |
Increase (decrease) in fair value | Fair value | Increase (decrease) in fair value | |||
| GBP/USD | $ millions | $ millions | $ millions | $ millions | $ millions |
| Type of instrument | Increase of 10% | Increase of 5% | Decrease of 5% | Decrease of 10% | |
| Cash and cash equivalents | (0.4) | (0.2) | 4.4 | 0.2 | 0.5 | (0.5) | (0.2) | 5.2 | 0.3 | 0.6 |
| Trade receivables | (5.5) | (2.9) | 60.3 | 3.2 | 6.7 | (3.7) | (2.0) | 41.2 | 2.2 | 4.6 |
| Receivables and debit balances | 0.0 | 0.4 | 0.0 | (0.1) | 0.0 | 0.8 | 0.0 | 0.1 | ||
| Credit from banks and others | 1.7 | 0.9 | (18.7) | (1.0) | (2.1) | |||||
| Trade payables | 2.1 | 1.1 | (22.7) | (1.2) | (2.5) | 2.6 | 1.4 | (28.5) | (1.5) | (3.2) |
| Other payables | 0.6 | 0.3 | (6.6) | (0.3) | (0.7) | 0.3 | 0.2 | (3.8) | (0.2) | (0.4) |
| Options | (1.3) | (0.6) | (0.1) | 0.4 | 0.8 | (1.2) | (0.7) | (0.1) | 0.5 | 1.1 |
| Forward | (3.5) | (1.7) | 0.3 | 1.5 | 2.9 | (1.6) | (0.8) | (0.3) | 0.8 | 1.6 |
| Total | (6.3) | (3.1) | 17.3 | 2.8 | 5.6 | (4.2) | (2.1) | 14.5 | 2.1 | 4.4 |
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Increase (decrease) in fair value | Fair value | Increase (decrease) in fair value | |||
| BRL/USD | $ millions | $ millions | $ millions | $ millions | $ millions |
| Type of instrument | Increase of 10% | Increase of 5% | Decrease of 5% | Decrease of 10% | |
| Cash and cash equivalents | (0.5) | (0.2) | 5.0 | 0.3 | 0.6 | (6.9) | (3.6) | 76.3 | 4.0 | 8.5 |
| Trade receivables | (2.3) | (1.2) | 25.2 | 1.3 | 2.8 | (20.2) | (10.6) | 221.8 | 11.7 | 24.6 |
| Trade payables | 1.0 | 0.5 | (10.9) | (0.6) | (1.2) | 9.4 | 4.9 | (103.3) | (5.4) | (11.5) |
| Long-term deposits and loans | (0.6) | (0.3) | 6.2 | 0.3 | 0.7 | |||||
| Other payables | 0.2 | 0.1 | (2.2) | (0.1) | (0.2) | 0.9 | 0.5 | (10.3) | (0.5) | (1.1) |
| Long-term loans from banks | 1.7 | 0.9 | (19.1) | (1.0) | (2.1) | 0.2 | 0.1 | (2.3) | (0.1) | (0.3) |
| Forward | 3.4 | 1.8 | (0.9) | (2.0) | (4.2) | |||||
| Total | 0.1 | (2.0) | (0.1) | (13.8) | (7.2) | 188.4 | 8.0 | 16.7 | ||
Increase (decrease) in fair value | Fair value | Increase (decrease) in fair value | |||
| CNY/USD | $ millions | $ millions | $ millions | $ millions | $ millions |
| Type of instrument | Increase of 10% | Increase of 5% | Decrease of 5% | Decrease of 10% | |
| Cash and cash equivalents | (3.4) | (1.8) | 37.2 | 2.0 | 4.1 |
| Trade receivables | (6.5) | (3.4) | 71.5 | 3.8 | 7.9 |
| Trade payables | 6.5 | 3.4 | (71.9) | (3.8) | (8.0) |
| Other payables | 1.8 | 0.9 | (19.4) | (1.0) | (2.2) |
| Credit from banks and others | 16.7 | 8.8 | (184.0) | (9.7) | (20.4) |
| Forward | (2.6) | (1.4) | (0.1) | 1.5 | 3.2 |
| Long-term loans (CNY) | 0.1 | 0.0 | (0.7) | 0.0 | (0.1) |
| Total | 12.6 | 6.5 | (167.4) | (7.2) | (15.5) |
| Cash and cash equivalents | (23.9) | (12.5) | 262.8 | 13.8 | 29.2 |
| Short term investments and deposits | (0.3) | (0.2) | 3.2 | 0.2 | 0.4 |
| Trade receivables | (8.2) | (4.3) | 90.7 | 4.8 | 10.1 |
| Trade payables | 8.3 | 4.3 | (90.9) | (4.8) | (10.1) |
| Other payables | 1.4 | 0.7 | (15.0) | (0.8) | (1.7) |
| Long-term loans (CNY) | 3.2 | 1.7 | (34.8) | (1.8) | (3.9) |
| Forward | (4.2) | (2.2) | 0.7 | 2.5 | 5.2 |
| Total | (23.7) | (12.5) | 216.7 | 13.9 | 29.2 |
The tables below set forth the sensitivity of our derivative instruments and certain balance sheet items to 5% and 10% increases and decreases in the exchange rates as atof December 31, 2017.2020.
Increase (decrease) in fair value | Fair value | Increase (decrease) in fair value | |||
| USD/NIS | $ millions | $ millions | $ millions | $ millions | $ millions |
| Type of instrument | Increase of 10% | Increase of 5% | Decrease of 5% | Decrease of 10% | |
| Cash and cash equivalents | (0.1) | 1.4 | 0.1 | (0.2) | (0.1) | 2.2 | 0.1 | 0.2 | ||
| Short term deposits and loans | 0.0 | 0.1 | 0.0 | |||||||
| Trade receivables | (5.9) | (3.0) | 59.0 | 3.0 | 5.9 | (5.3) | (2.8) | 58.0 | 3.1 | 6.4 |
| Receivables and debit balances | (3.9) | (2.0) | 39.4 | 2.0 | 3.9 | (0.6) | (0.3) | 6.7 | 0.4 | 0.7 |
| Credit from banks and others | 3.3 | 1.6 | (32.7) | (1.6) | (3.3) | 3.3 | 1.7 | (35.8) | (1.9) | (4.0) |
| Trade payables | 28.9 | 14.4 | (288.8) | (14.4) | (28.9) | 29.6 | 15.5 | (325.8) | (17.1) | (36.2) |
| Other payables | 9.6 | 4.8 | (96.3) | (4.8) | (9.6) | 1.5 | 0.8 | (17.0) | (0.9) | (1.9) |
| Long-term loans | 7.8 | 4.1 | (86.0) | (4.5) | (9.6) | 12.4 | 6.5 | (135.9) | (7.2) | (15.1) |
| Fixed rate debentures (series E) | 42.8 | 22.4 | (470.9) | (24.8) | (52.3) | |||||
| Fixed rate debentures | 67.9 | 35.6 | (747.4) | (39.3) | (83.0) | |||||
| Options | (35.6) | (9.1) | 3.2 | 20.5 | 50.0 | (26.1) | (13.6) | 11.2 | 19.2 | 43.9 |
| Forward | (39.1) | (20.5) | 1.8 | 22.7 | 47.8 | (39.0) | (20.4) | 8.1 | 22.6 | 47.7 |
| Swap | (52.9) | (27.4) | 64.0 | 31.7 | 66.2 | (81.7) | (43.0) | 115.2 | 47.8 | 101.0 |
| Total | (45.1) | (14.8) | (806.0) | 29.9 | 70.2 | (38.2) | (20.1) | (1,060.5) | 26.8 | 59.7 |
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Increase (decrease) in fair value | Fair value | Increase (decrease) in fair value | |||
| EUR/USD | $ millions | $ millions | $ millions | $ millions | $ millions |
| Type of instrument | Increase of 10% | Increase of 5% | Decrease of 5% | Decrease of 10% | |
| Cash and cash equivalents | (1.8) | (0.9) | 17.9 | 0.9 | 1.8 |
| Short term deposits and loans | (0.1) | 0.0 | 0.7 | 0.0 | 0.1 |
| Trade receivables | (24.6) | (12.3) | 246.4 | 12.3 | 24.6 |
| Receivables and debit balances | (0.1) | 0.0 | 0.9 | 0.0 | 0.1 |
| Long-term deposits and loans | (0.1) | (0.1) | 1.1 | 0.1 | 0.1 |
| Credit from banks and others | 15.8 | 7.9 | (157.6) | (7.9) | (15.8) |
| Trade payables | 18.2 | 9.1 | (182.1) | (9.1) | (18.2) |
| Other payables | 7.7 | 3.8 | (76.9) | (3.8) | (7.7) |
| Long-term loans from banks | 2.9 | 1.4 | (29.0) | (1.4) | (2.9) |
| Options | 5.7 | 2.8 | (1.8) | (3.1) | (6.7) |
| Forward | 35.0 | 16.6 | (2.6) | (15.0) | (28.7) |
| Swap | 5.3 | 2.7 | (0.6) | (2.5) | (5.1) |
| Total | 63.9 | 31.0 | (183.6) | (29.5) | (58.4) |
| Cash and cash equivalents | (1.2) | (0.6) | 12.8 | 0.7 | 1.4 |
| Short term deposits and loans | (0.5) | (0.2) | 5.0 | 0.3 | 0.6 |
| Trade receivables | (20.7) | (10.8) | 227.4 | 12.0 | 25.3 |
| Receivables and debit balances | (3.7) | (1.9) | 40.6 | 2.1 | 4.5 |
| Long-term deposits and loans | (0.2) | (0.1) | 2.5 | 0.1 | 0.3 |
| Credit from banks and others | 6.4 | 3.3 | (70.0) | (3.7) | (7.8) |
| Trade payables | 14.9 | 7.8 | (163.5) | (8.6) | (18.2) |
| Other payables | 6.2 | 3.2 | (68.0) | (3.6) | (7.6) |
| Long-term loans from banks | 3.3 | 1.7 | (35.9) | (1.9) | (4.0) |
| Options | 3.8 | 2.1 | (1.5) | (2.8) | (6.1) |
| Forward | 13.6 | 7.1 | (0.1) | (7.9) | (16.6) |
| Swap | 33.4 | 17.5 | (41.1) | (19.4) | (40.9) |
| Total | 55.3 | 29.1 | (91.8) | (32.7) | (69.1) |
Increase (decrease) in fair value | Fair value | Increase (decrease) in fair value | |||
| GBP/USD | $ millions | $ millions | $ millions | $ millions | $ millions |
| Type of instrument | Increase of 10% | Increase of 5% | Decrease of 5% | Decrease of 10% | |
| Cash and cash equivalents | (0.5) | (0.2) | 5.0 | 0.3 | 0.6 |
| Trade receivables | (3.2) | (1.7) | 35.1 | 1.8 | 3.9 |
| Credit from banks and others | 7.7 | 4.0 | (84.7) | (4.5) | (9.4) |
| Trade payables | 2.0 | 1.0 | (21.5) | (1.1) | (2.4) |
| Other payables | 0.3 | 0.2 | (3.6) | (0.2) | (0.4) |
| Long-term loans | 2.0 | 1.1 | (22.3) | (1.2) | (2.5) |
| Swap | (6.2) | (3.3) | 5.0 | 3.6 | 7.6 |
| Options | (0.8) | (0.4) | 0.4 | 0.5 | 1.1 |
| Forward | (2.5) | (1.3) | 0.3 | 1.4 | 3.0 |
| Total | (1.2) | (0.6) | (86.3) | 0.6 | 1.5 |
| Cash and cash equivalents | (0.7) | (0.3) | 6.7 | 0.3 | 0.7 |
| Trade receivables | (4.8) | (2.4) | 47.8 | 2.4 | 4.8 |
| Receivables and debit balances | 0.0 | 0.0 | 0.1 | 0.0 | 0.0 |
| Credit from banks and others | 2.0 | 1.0 | (20.3) | (1.0) | (2.0) |
| Trade payables | 2.3 | 1.2 | (23.0) | (1.2) | (2.3) |
| Other payables | 1.5 | 0.7 | (14.7) | (0.7) | (1.5) |
| Options | - | - | - | - | - |
| Forward | 2.6 | 1.2 | 0.1 | (1.1) | (2.2) |
| Total | 2.9 | 1.4 | (3.3) | (1.3) | (2.5) |
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Increase (decrease) in fair value | Fair value | Increase (decrease) in fair value | |||
| BRL/USD | $ millions | $ millions | $ millions | $ millions | $ millions |
| Type of instrument | Increase of 10% | Increase of 5% | Decrease of 5% | Decrease of 10% | |
| Cash and cash equivalents | (0.7) | (0.3) | 6.5 | 0.3 | 0.7 | (0.6) | (0.3) | 6.4 | 0.3 | 0.7 |
| Trade receivables | (3.1) | (1.5) | 30.8 | 1.5 | 3.1 | (1.9) | (1.0) | 21.4 | 1.1 | 2.4 |
| Trade payables | 1.5 | 0.8 | (15.5) | (0.8) | (1.5) | 1.0 | 0.5 | (11.0) | (0.6) | (1.2) |
| Long-term deposits and loans | (0.3) | (0.2) | 3.6 | 0.2 | 0.4 | |||||
| Other payables | 0.2 | 0.1 | (1.9) | (0.1) | (0.2) | 0.0 | 0.0 | (0.1) | 0.0 | 0.0 |
| Long-term loans from banks | 3.0 | 1.5 | (30.0) | (1.5) | (3.0) | 0.8 | 0.4 | (8.9) | (0.5) | (1.0) |
| Options | (0.2) | (0.2) | 0.2 | 0.2 | ||||||
| Forward | 0.1 | 0.0 | (0.1) | (0.1) | ||||||
| Total | 0.9 | 0.6 | (10.1) | (0.6) | (0.9) | (1.1) | (0.8) | 11.6 | 0.6 | 1.4 |
Increase (decrease) in fair value | Fair value | Increase (decrease) in fair value | |||
| CNY/USD | $ millions | $ millions | $ millions | $ millions | $ millions |
| Type of instrument | Increase of 10% | Increase of 5% | Decrease of 5% | Decrease of 10% | |
| Cash and cash equivalents | (2.2) | (1.1) | 21.6 | 1.1 | 2.2 | (5.5) | (2.9) | 60.2 | 3.2 | 6.7 |
| Short term investments and deposits | (0.3) | (0.2) | 3.7 | 0.2 | 0.4 | |||||
| Trade receivables | (9.2) | (4.6) | 91.7 | 4.6 | 9.2 | (4.6) | (2.4) | 51.1 | 2.7 | 5.7 |
| Investments at fair value through other comprehensive income | (12.3) | (6.5) | 135.7 | 7.1 | 15.1 | |||||
| Trade payables | 8.5 | 4.3 | (85.3) | (4.3) | (8.5) | 6.0 | 3.2 | (66.3) | (3.5) | (7.4) |
| Other payables | 2.1 | 1.0 | (20.8) | (1.0) | (2.1) | 2.4 | 1.2 | (26.0) | (1.4) | (2.9) |
| Credit from banks and others | 17.3 | 8.7 | (173.3) | (8.7) | (17.3) | 5.6 | 2.9 | (61.9) | (3.3) | (6.9) |
| Long-term loans (CNY) | 5.4 | 2.8 | (59.8) | (3.1) | (6.6) | |||||
| Forward | 3.1 | 1.6 | (0.7) | (1.8) | (3.8) | 2.1 | 1.1 | (0.2) | (1.2) | (2.6) |
| Long-term loans (CNY) | 9.8 | 4.9 | (98.1) | (4.9) | (9.8) | |||||
| Total | 29.4 | 14.8 | (264.9) | (15.0) | (30.1) | (1.2) | (0.8) | 36.5 | 0.7 | 1.5 |
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Interest Rate Risk
We have loans bearing variable interest that expose our finance expenses and cash flowsflow to changes in interest rates. With respect to our fixed‑interest loans, there is exposure to changes in the fair value of the loans due to changes in the market interest rate.
We use some hedging transactions in order to hedge some of the above exposure. The hedging is implemented by using a fixed interest range and by hedging variable interest.
The table below sets forth the sensitivity of certain financial instruments to 0.5% and 1% increases and decreases in the LIBORUSD interest rate as atof December 31, 2018.2021.
Increase (decrease) in fair value | Fair value | Increase (decrease) in fair value | |||
| $ millions | $ millions | $ millions | $ millions | $ millions | |
| Type of instrument | Increase of 1% | Increase of 0.5% | Decrease of 0.5% | Decrease of 1% | |
| Fixed-USD interest debentures | 77.5 | 40.0 | (1,068.9) | (42.7) | (88.4) | 98.5 | 50.9 | (1,302.1) | (54.4) | (112.6) |
| Swap transactions | 7.7 | 3.9 | 0.4 | (4.0) | (8.2) | 4.2 | 2.1 | (6.5) | (2.2) | (4.3) |
| NIS/USD swap | 17.6 | 8.9 | 14.7 | (9.1) | (18.4) | 28.8 | 14.8 | 118.8 | (15.6) | (31.9) |
| EUR/USD swap | (0.2) | (0.1) | (1.0) | 0.1 | 0.2 | |||||
| Total | 102.8 | 52.8 | (1,054.8) | (55.8) | (115.0) | 131.5 | 67.8 | (1,189.8) | (72.2) | (148.8) |
The table below sets forth the sensitivity of certain financial instruments to 0.5% and 1% increases and decreases in the LIBORUSD interest rate as atof December 31, 2017.2020.
Increase (decrease) in fair value | Fair value | Increase (decrease) in fair value | |||
| $ millions | $ millions | $ millions | $ millions | $ millions | |
| Type of instrument | Increase of 1% | Increase of 0.5% | Decrease of 0.5% | Decrease of 1% | |
| Fixed-USD interest debentures | 58.2 | 29.6 | (1,107.9) | (30.7) | (62.4) | 108.0 | 55.8 | (1,419.1) | (59.8) | (124.0) |
| Swap transactions | 10.1 | 5.1 | (2.7) | (5.3) | (10.8) | 5.9 | 3.0 | (13.1) | (3.0) | (6.1) |
| NIS/USD swap | 33.1 | 22.4 | 64.0 | (11.7) | (23.6) | 36.6 | 18.8 | 115.2 | (19.5) | (39.5) |
| GBP/USD swap | 0.2 | 0.1 | 5.0 | (0.1) | (0.2) | |||||
| EUR/USD swap | (0.9) | (0.5) | (41.1) | 0.5 | 1.0 | |||||
| Total | 101.4 | 57.1 | (1,046.6) | (47.7) | (96.8) | 149.8 | 77.2 | (1,353.1) | (81.9) | (168.8) |
The table below sets forth the sensitivity of certain financial instruments to 0.5% and 1% increases and decreases in the NIS interest rate as atof December 31, 2018.2021.
| Sensitivity to changes in the shekel interest rate | Increase (decrease) in fair value | Fair value | Increase (decrease) in fair value | ||
| $ millions | $ millions | $ millions | $ millions | $ millions | |
| Type of instrument | Increase of 1% | Increase of 0.5% | Decrease of 0.5% | Decrease of 1% | |
| Fixed-interest long-term loan | 0.2 | 0.1 | (60.3) | (0.1) | (0.1) |
| Fixed rate debentures | 26.6 | 13.6 | (635.8) | (14.4) | (29.5) |
| NIS/USD swap | (35.1) | (18.1) | 118.8 | 19.2 | 39.4 |
| Total | (8.3) | (4.4) | (577.3) | 4.7 | 9.8 |
| Fixed-interest long-term loan | 2.7 | 1.4 | (73.0) | (1.4) | (2.9) |
| Fixed rate debentures (series E) | 14.5 | 7.4 | (426.8) | (7.5) | (15.3) |
| NIS/USD swap | (18.5) | (9.4) | 14.7 | 9.6 | 19.5 |
| Total | (1.3) | (0.6) | (485.1) | 0.7 | 1.3 |
The table below sets forth the sensitivity of certain financial instruments to 0.5% and 1% increases and decreases in the NIS interest rate as atof December 31, 2017.2020.
| Sensitivity to changes in the shekel interest rate | Increase (decrease) in fair value | Fair value | Increase (decrease) in fair value | ||
| $ millions | $ millions | $ millions | $ millions | $ millions | |
| Type of instrument | Increase of 1% | Increase of 0.5% | Decrease of 0.5% | Decrease of 1% | |
| Fixed-interest long-term loan | 3.7 | 1.9 | (86.0) | (2.0) | (4.0) | 1.9 | 0.9 | (135.9) | (1.0) | (1.9) |
| Fixed rate debentures (series E) | 20.1 | 10.2 | (470.9) | (10.5) | (21.3) | |||||
| Fixed rate debentures | 31.6 | 16.2 | (747.4) | (17.1) | (35.1) | |||||
| NIS/USD swap | (25.9) | (13.1) | 64.0 | 13.5 | 27.5 | (42.4) | (22.1) | 115.2 | 23.8 | 49.0 |
| Total | (2.1) | (1.0) | (492.9) | 1.0 | 2.2 | (8.9) | (5.0) | (768.1) | 5.7 | 12.0 |
Energy Price Risk
We use Energyenergy as part of operating our mines, facilities and logistics channels. We are executingexecute some hedging transactions to hedge somea portion of this exposure.
Increase (decrease) in fair value | Fair value | Increase (decrease) in fair value | |||
| $ millions | $ millions | $ millions | $ millions | $ millions | |
| Type of instrument | Increase of 10% | Increase of 5% | Decrease of 5% | Decrease of 10% | |
| Energy hedges |
The table below sets forth the sensitivity of instruments hedging energy price risks to 5% and 10% increases and decreases in energy prices as of December 31, 2017.2020.
Increase (decrease) in fair value | Fair value | Increase (decrease) in fair value | |||
| $ millions | $ millions | $ millions | $ millions | $ millions | |
Increase of 10% | Increase of 5% | Decrease of 5% | Decrease of 10% | ||
| Energy hedges | - | |
ICL Group Limited 259
Marine Shipping Price Risk
We are shippingship substantial amounts of goods worldwide using marine shipments. We execute some hedging transactions to reduce somea portion of our exposure to marine bulk shipping prices.
The table below sets forth the sensitivity of instruments hedging marine shipping price risk to 5% and 10% increases and decreases in marine shipping prices as of December 31, 2018.2021.
Increase (decrease) in fair value | Fair value | Increase (decrease) in fair value | |||
| $ millions | $ millions | $ millions | $ millions | $ millions | |
| Type of instrument | Increase of 10% | Increase of 5% | Decrease of 5% | Decrease of 10% | |
| Marine shipping hedges | | | | | |
Increase (decrease) in fair value | Fair value | Increase (decrease) in fair value | |||
| $ millions | $ millions | $ millions | $ millions | $ millions | |
| Type of instrument | Increase of 10% | Increase of 5% | Decrease of 5% | Decrease of 10% | |
| Marine shipping hedges |
Not Applicable.
Not Applicable.
Not Applicable.
A. DISCLOSURE CONTROLS AND PROCEDURES
ICL’s Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of ICL’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this annual report, have concluded that, as of such date, ICL’s disclosure controls and procedures were effective to ensure that the information required in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and such information is accumulated and communicated to its management, including its chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
B. MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROLS OVER FINANCIAL REPORTING
ICL’s management is responsible for establishing and maintaining adequate internal control over financial reporting. ICL’s internal control over financial reporting system was designed by, or under the supervision of, the Chief Executive Officer and Chief Financial Officer, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of its consolidated financial statements, for external purposes, in accordance with generally accepted accounting principles. These include those policies and procedures that:
| pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of our assets; |
| provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements, in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorization of our management and directors; and |
| provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, effective control over financial reporting cannot, and does not, provide absolute assurance of achieving our control objectives. Also, projections of, and any evaluation of effectiveness of the internal controls in future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management, including our Chief Executive Officer and our Chief Financial Officer, assessed the effectiveness of ICL’s internal control over financial reporting as of December 31, 2018.2021. In making this assessment, our management used the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission of 2013 (COSO). Based on such assessment, our management has concluded that, as of December 31, 2018,2021, ICL’s internal control over financial reporting is effective based on those criteria.
ICL Group Limited 261
C. Attestation Report of the Registered Public Accounting Firm
Somekh Chaikin, member firm of KPMG International, an independent registered public accounting firm, has audited and reported on the effectiveness of ICL’s internal controls over financial reporting as of December 31, 2018.2021. See Somekh Chaikin’s attestation report on page F-2 of this annual report.report.
D. Changes in internal control over financial reporting
There has been no identified change in our internal control over financial reporting in connection with the evaluation required by Rules 13a-15 or 15d-15 that occurred during the period covered by this annual report that has materially affected, or is likely to materially affect, our internal control over financial reporting.reporting.
Our Board of Directors has determined, based on qualification statements delivered to the Company, that Board members, Dr. Miriam Haran, Ms. Ruth RalbagDafna Gruber and Messrs. Nadav KaplanLior Reitblatt and Lior ReitblattGadi Lesin shall serve as financial experts of the Audit and Accounting Committee, as that term is defined in Item 16A(b) of Form 20-F, and that all members of the Audit and Accounting Committee, Dr. Miriam Haran, Ms. Ruth RalbagDafna Gruber and Messrs. Nadav KaplanLior Reitblatt and Lior ReitblattGadi Lesin, are financially literate and are independent directors for the purposes Rule of 10A-3 of the Exchange Act and of the NYSE trade listing requirements.requirements.
Our Board of Directors havehas adopted a Code of Conduct that applies to our Board of Directors, senior management and employees, including our chief executive officer, chief financial officer, chief accounting officer or controllerChief Executive Officer, Chief Financial Officer, Controller and any other persons who perform similar functions for us. Our Code of Ethics is available, on our website,www.icl-group.com www.icl-group.com. We intend to disclose future amendments to our code of ethics, or any waivers of such code, on our website or in public filings. 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.
Item16C – PRINCIPAL ACCOUNTANT FEES AND SERVICES
Somekh Chaikin, Tel Aviv, Israel (PCAOB ID 1057), a member of KPMG International, has served as our independent registered public accounting firm for 20182021 and 2017.2020. Following are the billedKPMG International's fees for their professional services in each of thosethe respective fiscal years:
| 2018 | 2017 | |
| US$ thousands | US$ thousands |
2021 | 2020 | |
US$ thousands | US$ thousands |
| Audit fees(1) | 4,897 | 5,132 | 4,645 | 4,739 |
| Audit-related fees(2) | 192 | 395 | 148 | 146 |
| Tax fees(3) | 1,751 | 1,473 | 1,303 | 1,643 |
| Total | 6,840 | 7,000 | 6,096 | 6,528 |
(1) Audit fees are the aggregate fees billed or expected to be billed for the audit of our annual financial statements. This category also includes services that are generally provided by the independent accountant, such as consents and review of documents filed with the SEC.
(2) Audit-related Fees are the aggregate fees billed for assurance and related services rendered during the yearyears ended December 31, 20182021 and 2020, that are reasonably related to the performance of the audit and are not reported under Auditaudit fees. These fees include mainly audits of financial statements of a carve-out entity in anticipation of a divestiture and accounting consultation on proposed transactions.
(3) Tax fees are the aggregate fees billed for professional services rendered during the yearyears ended December 31, 2021 and 2020, rendered for tax compliance, tax advice, and tax planning, assistance with tax audits and appeals.
Audit Committee’s pre-approval policies and procedures
All services provided by our independent auditors are approved in advance by either the Audit and Accounting Committee or members thereof, to whom authority has been delegated, in accordance with the Audit and Accounting Committee's pre-approval procedure respecting such services.services.
Not Applicable.
Not Applicable.
ICL Group Limited 263
Item16F –CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not Applicable.
Corporate Governance Practices
We are incorporated in Israel and therefore subject to various corporate governance provisions under the Companies Law and the regulations promulgated thereunder, relating to such matters as external directors, the audit committee, the compensation committee and the internal auditor. These are in addition to the requirements of the NYSE and relevant provisions of U.S.US securities laws that apply to foreign companies listed for tradetrading in the U.S.US.
As a foreign private issuer whose shares are listed on the NYSE, we have the option to follow certain corporate governance practices applyingthat apply in the country of incorporation of the foreign company, Israel, rather than those of the NYSE, except to the extent that such laws would be contrary to U.S.US securities laws and provided that we disclose the practices that we are not following and describe the home country practices which we elected to follow instead. We intend to rely on this “foreign private issuer exemption” with respect to the following NYSE requirements:
Majority Independent Board.Under Section 303A.01 of the NYSE Listed Company Manual (the “LCM”), a |
Nominating/Corporate Governance Committee. Under Section 303A.04 of the LCM, a |
Equity Compensation Plans. Under Section 303A.08 of the LCM, shareholders must be given the opportunity to vote on all equity‑compensation plans and material revisions thereto, with certain limited exemptions as described therein. We follow the requirements of the |
ICL Group Limited 264
Shareholder Approval of Securities Issuances. Under Section 312.03 of the LCM, shareholder approval is a prerequisite to (a) issuing |
The securities issued amount to 20% or more of the Company’s outstanding voting rights before the issuance;
| The transaction will increase the relative holdings of a 5% shareholder or will cause any person to become, as a result of the issuance, a 5% shareholder. |
Except as stated above, we intend to comply with virtually all the rules applicable to U.S. companies listed on the NYSE. We may decide in the future to use additional and/or other foreign private issuer exemptions with respect to some or all of the other NYSE listing requirements. Following governance practices of our home country, Israel, as opposed to the requirements that would otherwise apply to a company listed on the NYSE, may provide less protection than is accorded to investors under NYSE listing requirements applicable to domestic issuers. For morefurther information, see “Item“Item 3 - Key Information— D. Risk Factors—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”.
Not applicable.
Item 16I – DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
See “Item 18 - Financial Statements”.
See page F-1.
ICL Group Limited 266
Item 19 – EXHIBITS
We have filed certain exhibits to our Form 20-F filed with the SEC, which are available for perusal at: www.sec.gov.
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
101.INS | XBRL Instance Document |
ICL Group Limited 267
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| ICL Group Ltd. | ||||
| By: | /s/ | Aviram Lahav | ||
| Name: | Aviram Lahav | |||
| Title: | Chief Financial Officer | |||
| ICL Group Ltd. | ||||
| By: | /s/ Aya Landman | |||
| Name: | Aya Landman | |||
| Title: | & Global Compliance | |||
Date: February 27, 201923, 2022
ICL Group Limited 268
Consolidated Financial Statements
As of December 31, 2021
ICL Group Ltd |
Consolidated Financial Statements as atof December 31, 2018
2021
Contents
Auditors' Report (PCAOB 1057) | |
4 | |
Somekh Chaikin |
KPMG Millennium Tower | Telephone 972 3 684 8000 | |
17 Ha'arba'a Street, PO Box 609 | ||
Tel Aviv 61006 Israel | Internet www.kpmg.co.il |
Opinions on the Consolidated Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statements of financial position of Israel ChemicalsICL Group Ltd. and subsidiaries (the “Company”) as of December 31, 20182021 and 2017,2020, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2018,2021, and the related notes (collectively, the "consolidated financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 2018,2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20182021 and 2017,2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2018,2021, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018,2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
Commission.
Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
opinions.
opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board,generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Useful lives of the long-lived assets associated with Dead Sea Works Ltd. concession
As discussed in Note 18b (1) to the consolidated financial statements, the concession of Dead Sea Works Ltd. (DSW) will end on March 31, 2030. The consolidated financial statements were prepared based on the Company's assumption that it is more likely than not that DSW will continue to operate its long-lived assets for their remaining useful lives, which extend beyond the term of the current concession period, by obtaining the renewed concession or by operating the assets for an alternative holder.
We identified the evaluation of the useful lives of the long-lived assets associated with DSW's concession (hereinafter – the relevant assets) as a critical audit matter. Specifically, challenging auditor judgment was required to evaluate the Company’s determination that the useful lives of the relevant assets exceed the current concession period due to uncertainty relating to concession renewal and to effects from potential changes of the concession holder. Changes in the estimated useful lives of the relevant assets could have a significant effect on the depreciation expenses of these assets.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of an internal control related to the determination of useful lives of the long-lived assets associated with the with Dead Sea Works Ltd. concession. We evaluated the Company's estimate regarding the useful lives of the relevant assets by examining its analysis of potential alternatives of operating the assets for an alternative concession holder, as well as considering relevant publicly available information, such as, the Concession Law and the report released by the Israeli Ministry of Finance regarding the actions that the government may take towards the end of the concession period.
Uncertain tax treatment under the Law for Taxation of Profit from Natural Resources
As discussed in Note 15E to the consolidated financial statements, the Law for Taxation of Profits from Natural Resources in Israel (the Law) became effective in 2016. Under the law, the Company has taken a position regarding the value assigned to certain property, plant and equipment for tax purposes at the date the law became effective. Specifically, that the value of certain property, plant and equipment for tax purposes can be determined based on its fair value as determined by an independent appraiser using a replacement cost method and not based on its historical depreciated cost. The Company believes that it is more likely than not that its position will be accepted.
We identified the evaluation of uncertain tax treatment under the Law as a critical audit matter. Due to the lack of tax regulations, circulars, or court cases, complex auditor judgment was required in evaluating the Company’s position that the value of certain property, plant and equipment for tax purposes can be determined, at the date the law became effective, based on its fair value as determined by an independent appraiser using a replacement cost method and not based on its historical depreciated cost.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of an internal control related to the interpretation of the new tax law and the Company's application in the tax provision estimation process. We read letters received directly from the Company’s external legal counsel that evaluated the Company's interpretation of the Law. In addition, we involved tax professionals with specialized skills and knowledge who assisted in evaluating the Company’s interpretation of the Law and its potential impact on the tax provision.
(signed) Somekh Chaikin
Member Firm of KPMG International
We have served as the Company’s auditor since 2006.
Tel Aviv, Israel
February 26, 201922, 2022
Somekh Chaikin, a partnership registered under the Israeli partnership
Ordinance, is the Israeli member firm of KPMG International,
a Swiss cooperative.
| 2018 | 2017 | ||
| Note | $ millions | $ millions |
2021 | 2020 | ||
Note | $ millions | $ millions |
| Current assets | |||
| Cash and cash equivalents | 121 | 83 | |
| Short-term investments and deposits | 92 | 90 | |
| Trade receivables | 990 | 932 | |
| Inventories | 6 | 1,290 | 1,226 |
| Assets held for sale | - | 169 | |
| Other receivables | 7,14 | 295 | 225 |
| Total current assets | 2,788 | 2,725 | |
| Non-current assets | |||
| Investments in equity-accounted investees | 30 | 29 | |
| Investments at fair value through other comprehensive income | 145 | 212 | |
| Deferred tax assets | 17 | 122 | 132 |
| Property, plant and equipment | 11 | 4,663 | 4,521 |
| Intangible assets | 12 | 671 | 722 |
| Other non-current assets | 9,14,18 | 357 | 373 |
| Total non-current assets | 5,988 | 5,989 | |
| Total assets | 8,776 | 8,714 | |
| Current liabilities | |||
| Short-term credit | 15 | 610 | 822 |
| Trade payables | 715 | 790 | |
| Provisions | 19 | 37 | 78 |
| Liabilities held for sale | - | 43 | |
| Other current liabilities | 14,16 | 647 | 595 |
| Total current liabilities | 2,009 | 2,328 | |
| Non-current liabilities | |||
| Long-term debt and debentures | 15 | 1,815 | 2,388 |
| Deferred tax liabilities | 17 | 297 | 228 |
| Long-term employee liabilities | 18 | 501 | 640 |
| Provisions | 19 | 229 | 193 |
| Other non-current liabilities | 10 | 7 | |
| Total non-current liabilities | 2,852 | 3,456 | |
| Total liabilities | 4,861 | 5,784 | |
| Equity | 21 | ||
| Total shareholders’ equity | 3,781 | 2,859 | |
| Non-controlling interests | 134 | 71 | |
| Total equity | 3,915 | 2,930 | |
| Total liabilities and equity | 8,776 | 8,714 |
Current assets | |||
Cash and cash equivalents | 473 | 214 | |
Short-term investments and deposits | 91 | 100 | |
Trade receivables | 1,418 | 883 | |
Inventories | 6 | 1,570 | 1,250 |
Investments at fair value through other comprehensive income | 0 | 53 | |
Prepaid expenses and other receivables | 7 | 357 | 341 |
Total current assets | 3,909 | 2,841 | |
Non-current assets | |||
Investments at fair value through other comprehensive income | 0 | 83 | |
Deferred tax assets | 15 | 147 | 127 |
Property, plant and equipment | 10 | 5,754 | 5,550 |
Intangible assets | 11 | 867 | 670 |
Other non-current assets | 9,16 | 403 | 393 |
Total non-current assets | 7,171 | 6,823 | |
Total assets | 11,080 | 9,664 | |
Current liabilities | |||
Short-term debt | 13 | 577 | 679 |
Trade payables | 1,064 | 740 | |
Provisions | 17 | 59 | 54 |
Other payables | 14 | 912 | 704 |
Total current liabilities | 2,612 | 2,177 | |
Non-current liabilities | |||
Long-term debt and debentures | 13 | 2,436 | 2,053 |
Deferred tax liabilities | 15 | 384 | 326 |
Long-term employee liabilities | 16 | 564 | 655 |
Long-term provisions and accruals | 17 | 278 | 267 |
Other | 70 | 98 | |
Total non-current liabilities | 3,732 | 3,399 | |
Total liabilities | 6,344 | 5,576 | |
Equity | |||
Total shareholders’ equity | 19 | 4,527 | 3,930 |
Non-controlling interests | 209 | 158 | |
Total equity | 4,736 | 4,088 | |
Total liabilities and equity | 11,080 | 9,664 |
The accompanying notes are an integral part of these consolidated financial statements.
ICL Group LimitedAnnual Report1
2021 | 2020 | 2019 | ||
Note | $ millions | $ millions | $ millions |
| 2018 | 2017 | 2016 | ||
| Note | $ millions | $ millions | $ millions |
| Sales | 22 | 5,556 | 5,418 | 5,363 | 20 | 6,955 | 5,043 | 5,271 |
| Cost of sales | 22 | 3,702 | 3,746 | 3,703 | 20 | 4,344 | 3,553 | 3,454 |
| Gross profit | 1,854 | 1,672 | 1,660 | 2,611 | 1,490 | 1,817 | ||
| Selling, transport and marketing expenses | 22 | 798 | 746 | 722 | 20 | 1,067 | 766 | 767 |
| General and administrative expenses | 22 | 257 | 261 | 321 | 20 | 276 | 232 | 254 |
| Research and development expenses | 22 | 55 | 55 | 73 | 20 | 64 | 54 | 50 |
| Other expenses | 22 | 84 | 90 | 618 | 20 | 57 | 256 | 30 |
| Other income | 22 | (859) | (109) | (71) | 20 | (63) | (20) | (40) |
| Operating income (loss) | 1,519 | 629 | (3) | |||||
Operating income | 1,210 | 202 | 756 | |||||
| Finance expenses | 214 | 229 | 157 | 216 | 219 | 220 | ||
| Finance income | (56) | (105) | (25) | (94) | (61) | (91) | ||
| Finance expenses, net | 22 | 158 | 124 | 132 | 20 | 122 | 158 | 129 |
| Share in earnings of equity-accounted investees | 3 | - | 18 | 4 | 5 | 1 | ||
| Income (loss) before income taxes | 1,364 | 505 | (117) | |||||
Income before taxes on income | 1,092 | 49 | 628 | |||||
| Provision for income taxes | 17 | 129 | 158 | 55 | ||||
Taxes on income | 15 | 260 | 25 | 147 | ||||
| Net income (loss) | 1,235 | 347 | (172) | |||||
Net income | 832 | 24 | 481 | |||||
| Net loss attributable to the non-controlling interests | (5) | (17) | (50) | |||||
Net income attributable to the non-controlling interests | 49 | 13 | 6 | |||||
| Net income (loss) attributable to the shareholders of the Company | 1,240 | 364 | (122) | |||||
Net income attributable to the shareholders of the Company | 783 | 11 | 475 | |||||
| Earnings (losses) per share attributable to the shareholders of the Company: | 24 | |||||||
Earnings per share attributable to the shareholders of the Company: | 22 | |||||||
| Basic earnings (losses) per share (in dollars) | 0.97 | 0.29 | (0.10) | |||||
Basic earnings per share (in dollars) | 0.61 | 0.01 | 0.37 | |||||
| Diluted earnings (losses) per share (in dollars) | 0.97 | 0.29 | (0.10) | |||||
Diluted earnings per share (in dollars) | 0.60 | 0.01 | 0.37 | |||||
| Weighted-average number of ordinary shares outstanding: | 24 | 22 | ||||||
| Basic (in thousands) | 1,277,209 | 1,276,072 | 1,273,295 | 1,282,807 | 1,280,026 | 1,278,950 | ||
| Diluted (in thousands) | 1,279,781 | 1,276,997 | 1,273,295 | 1,287,051 | 1,280,273 | 1,282,056 | ||
The accompanying notes are an integral part of these consolidated financial statements.
2021 | 2020 | 2019 | |
$ millions | $ millions | $ millions |
| 2018 | 2017 | 2016 | |
| $ millions | $ millions | $ millions |
Net income | 832 | 24 | 481 |
Components of other comprehensive income that will be reclassified subsequently to net income | |||
Foreign currency translation differences | (105) | 118 | (20) |
Change in fair value of cash flow hedges transferred to the statement of income | (15) | (54) | (38) |
Effective portion of the change in fair value of cash flow hedges | 13 | 53 | 42 |
Tax relating to items that will be reclassified subsequently to net income | 0 | 0 | (1) |
(107) | 117 | (17) | |
Components of other comprehensive income that will not be reclassified to net income | |||
Net changes of investments at fair value through other comprehensive income | 155 | 18 | 10 |
Gains (losses) from defined benefit plans | 85 | (15) | (75) |
Tax relating to items that will not be reclassified to net income | (44) | (6) | 10 |
196 | (3) | (55) | |
Total comprehensive income | 921 | 138 | 409 |
Comprehensive income attributable to the non-controlling interests | 54 | 23 | 4 |
Comprehensive income attributable to the shareholders of the Company | 867 | 115 | 405 |
| Net income (loss) | 1,235 | 347 | (172) |
| Components of other comprehensive income that will be reclassified subsequently to net income (loss) | |||
| Currency translation differences | (95) | 152 | (90) |
| Changes in fair value of derivatives designated as a cash flow hedge | - | - | (1) |
| Net changes of investments at fair value through other comprehensive income | - | (57) | 17 |
| Tax income (expenses) relating to items that will be reclassified subsequently to net income (loss) | - | 5 | (5) |
| (95) | 100 | (79) | |
| Components of other comprehensive income that will not be reclassified to net income (loss) | |||
| Net changes of investments at fair value through other comprehensive income | (58) | - | - |
| Actuarial gains (losses) from defined benefit plans | 56 | (17) | (48) |
| Tax income (expense) relating to items that will not be reclassified to net income (loss) | (3) | 3 | 8 |
| (5) | (14) | (40) | |
| Total comprehensive income (loss) | 1,135 | 433 | (291) |
| Comprehensive loss attributable to the non-controlling interests | (9) | (13) | (59) |
| Comprehensive income (loss) attributable to the shareholders of the Company | 1,144 | 446 | (232) |
The accompanying notes are an integral part of these consolidated financial statements.
ICL Group LimitedAnnual Report3
Attributable to the shareholders of the Company | Non- controlling interests | Total equity | |||||||
Share capital | Share premium | Cumulative translation adjustment | Capital reserves | Treasury shares, at cost | Retained earnings | Total shareholders’ equity | |||
$ millions | |||||||||
| For the year ended December 31, 2018 | |||||||||
| Balance as at January 1, 2018 | 545 | 186 | (333) | 30 | (260) | 2,691 | 2,859 | 71 | 2,930 |
| Share-based compensation | 1 | 7 | - | 11 | - | - | 19 | - | 19 |
| Dividends | - | - | - | - | - | (241) | (241) | (1) | (242) |
| Capitalization of subsidiary debt | - | - | - | - | - | - | - | 73 | 73 |
| Comprehensive income (loss) | - | - | (91) | (58) | - | 1,293 | 1,144 | (9) | 1,135 |
| Balance as at December 31, 2018 | 546 | 193 | (424) | (17) | (260) | 3,743 | 3,781 | 134 | 3,915 |
For the year ended December 31, 2021 | |||||||||
Balance as of January 1, 2021 | 546 | 204 | (334) | 22 | (260) | 3,752 | 3,930 | 158 | 4,088 |
Share-based compensation | 2 | 20 | 0 | (16) | 0 | 0 | 6 | 0 | 6 |
Dividends | 0 | 0 | 0 | 0 | 0 | (276) | (276) | (3) | (279) |
Comprehensive income | 0 | 0 | (110) | 132 | 0 | 845 | 867 | 54 | 921 |
Balance as of December 31, 2021 | 548 | 224 | (444) | 138 | (260) | 4,321 | 4,527 | 209 | 4,736 |
The accompanying notes are an integral part of these consolidated financial statements.
ICL Group LimitedAnnual Report4
Consolidated Statements of Changes in Equity (cont'd)
Attributable to the shareholders of the Company | Non- controlling interests | Total equity | |||||||
Share capital | Share premium | Cumulative translation adjustment | Capital reserves | Treasury shares, at cost | Retained earnings | Total shareholders’ equity | |||
$ millions | |||||||||
| For the year ended December 31, 2017 | |||||||||
| Balance as at January 1, 2017 | 544 | 174 | (481) | 79 | (260) | 2,518 | 2,574 | 85 | 2,659 |
| Share-based compensation | 1 | 12 | - | 3 | - | - | 16 | - | 16 |
| Dividends | - | - | - | - | - | (177) | (177) | (1) | (178) |
| Comprehensive income (loss) | - | - | 148 | (52) | - | 350 | 446 | (13) | 433 |
| Balance as at December 31, 2017 | 545 | 186 | (333) | 30 | (260) | 2,691 | 2,859 | 71 | 2,930 |
For the year ended December 31, 2020 | |||||||||
Balance as of January 1, 2020 | 546 | 198 | (442) | 3 | (260) | 3,880 | 3,925 | 136 | 4,061 |
Share-based compensation | 0 | 6 | 0 | 2 | 0 | 0 | 8 | 0 | 8 |
Dividends | 0 | 0 | 0 | 0 | 0 | (118) | (118) | (1) | (119) |
Comprehensive income | 0 | 0 | 108 | 17 | 0 | (10) | 115 | 23 | 138 |
Balance as of December 31, 2020 | 546 | 204 | (334) | 22 | (260) | 3,752 | 3,930 | 158 | 4,088 |
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Changes in Equity (cont'd)
Attributable to the shareholders of the Company | Non- controlling interests | Total equity | |||||||
Share capital | Share premium | Cumulative translation adjustment | Capital reserves | Treasury shares, at cost | Retained earnings | Total shareholders’ equity | |||
$ millions | |||||||||
| For the year ended December 31, 2016 | |||||||||
| Balance as at January 1, 2016 | 544 | 149 | (400) | 93 | (260) | 2,902 | 3,028 | 160 | 3,188 |
| Share-based compensation | *- | 25 | - | (10) | - | - | 15 | - | 15 |
| Dividends | - | - | - | - | - | (222) | (222) | (4) | (226) |
| Changes in equity of equity-accounted investees | - | - | - | (15) | - | - | (15) | - | (15) |
| Non-controlling interests in business combinations from prior periods | - | - | - | - | - | - | - | (12) | (12) |
| Comprehensive loss | - | - | (81) | 11 | - | (162) | (232) | (59) | (291) |
| Balance as at December 31, 2016 | 544 | 174 | (481) | 79 | (260) | 2,518 | 2,574 | 85 | 2,659 |
For the year ended December 31, 2019 | |||||||||
Balance as of January 1, 2019 | 546 | 193 | (424) | (17) | (260) | 3,743 | 3,781 | 134 | 3,915 |
Share-based compensation | 0 | 5 | 0 | 7 | 0 | 0 | 12 | 0 | 12 |
Dividends | 0 | 0 | 0 | 0 | 0 | (273) | (273) | (2) | (275) |
Comprehensive income | 0 | 0 | (18) | 13 | 0 | 410 | 405 | 4 | 409 |
Balance as of December 31, 2019 | 546 | 198 | (442) | 3 | (260) | 3,880 | 3,925 | 136 | 4,061 |
The accompanying notes are an integral part of these consolidated financial statements.
ICL Group LimitedAnnual Report6
2021 | 2020 | 2019 | |
$ millions | $ millions | $ millions |
| 2018 | 2017 | 2016 | |
| $ millions | $ millions | $ millions |
Cash flows from operating activities | |||
Net income | 832 | 24 | 481 |
Adjustments for: | |||
Depreciation and amortization | 490 | 489 | 443 |
(Reversal of) Impairment of fixed assets | (6) | 90 | (10) |
Exchange rate, interest and derivative, net | 99 | 88 | 109 |
Tax expenses | 260 | 25 | 147 |
Change in provisions | (4) | 113 | (21) |
Other | (21) | 5 | (1) |
818 | 810 | 667 | |
Change in inventories | (267) | 54 | (72) |
Change in trade receivables | (426) | (89) | 199 |
Change in trade payables | 274 | 84 | (58) |
Change in other receivables | 9 | 5 | 5 |
Change in other payables | 107 | 54 | 4 |
Net change in operating assets and liabilities | (303) | 108 | 78 |
Interest paid, net | (89) | (107) | (114) |
Income taxes paid, net of refund | (193) | (31) | (120) |
Net cash provided by operating activities | 1,065 | 804 | 992 |
Cash flows from investing activities | |||
Proceeds (payments) from deposits, net | 355 | 34 | (2) |
Business combinations | (365) | (27) | 0 |
Purchases of property, plant and equipment and intangible assets | (611) | (626) | (576) |
Proceeds from divestiture of businesses net of transaction expenses | 31 | 26 | 0 |
Other | 11 | 10 | 53 |
Net cash used in investing activities | (579) | (583) | (525) |
Cash flows from financing activities | |||
Dividends paid to the Company's shareholders | (276) | (118) | (273) |
Receipt of long-term debt | 1,230 | 1,175 | 657 |
Repayments of long-term debt | (1,120) | (1,133) | (689) |
Repayments of short-term debt, net | (58) | (52) | (183) |
Receipts (payments) from transactions in derivatives | (17) | 24 | 0 |
Other | (3) | (1) | (2) |
Net cash used in financing activities | (244) | (105) | (490) |
Net change in cash and cash equivalents | 242 | 116 | (23) |
Cash and cash equivalents as of the beginning of the year | 214 | 95 | 121 |
Net effect of currency translation on cash and cash equivalents | 17 | 3 | (3) |
Cash and cash equivalents as of the end of the year | 473 | 214 | 95 |
| Cash flows from operating activities | |||
| Net income (loss) | 1,235 | 347 | (172) |
| Adjustments for: | |||
| Depreciation and amortization | 403 | 390 | 401 |
| Impairment of non-current assets | 17 | 28 | 5 |
| Exchange rate and interest expenses, net | 35 | 137 | 76 |
| Share in earnings of equity-accounted investees, net | (3) | - | (18) |
| Loss (gain) from divestiture of businesses | (841) | (54) | 1 |
| Capital losses | - | - | 432 |
| Share-based compensation | 19 | 16 | 15 |
| Deferred tax expenses (income) | 76 | (46) | (2) |
| (294) | 471 | 910 | |
| Change in inventories | (115) | 57 | 70 |
| Change in trade and other receivables | (104) | 21 | 150 |
| Change in trade and other payables | (36) | (45) | (90) |
| Change in provisions and employee benefits | (66) | (4) | 98 |
| Net change in operating assets and liabilities | (321) | 29 | 228 |
| Net cash provided by operating activities | 620 | 847 | 966 |
| Cash flows from investing activities | |||
| Proceeds from deposits, net | (3) | (65) | (198) |
| Purchases of property, plant and equipment and intangible assets | (572) | (457) | (632) |
| Proceeds from divestiture of businesses net of transaction expenses | * 902 | 6 | 17 |
| Proceeds from sale of equity-accounted investee | - | 168 | - |
| Dividends from equity-accounted investees | 2 | 3 | 12 |
| Proceeds from sale of property, plant and equipment | 2 | 12 | 5 |
| Other | - | - | (4) |
| Net cash provided by (used in) investing activities | 331 | (333) | (800) |
| Cash flows from financing activities | |||
| Dividends paid to the Company's shareholders | (241) | (237) | (162) |
| Receipt of long-term debt | 1,746 | 966 | 1,278 |
| Repayment of long-term debt | (2,115) | (1,387) | (1,365) |
| Short-term credit from banks and others, net | (283) | 147 | 14 |
| Other | (1) | - | (4) |
| Net cash used in financing activities | (894) | (511) | (239) |
| Net change in cash and cash equivalents | 57 | 3 | (73) |
| Cash and cash equivalents as at the beginning of the year | 83 | 87 | 161 |
| Net effect of currency translation on cash and cash equivalents | (24) | (2) | (1) |
| Cash and cash equivalents included as part of assets held for sale | 5 | (5) | - |
| Cash and cash equivalents as at the end of the year | 121 | 83 | 87 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
ICL Group LimitedAnnual Report7
For the year ended 31, December | |||
| 2018 | 2017 | 2016 | |
| $ millions | $ millions | $ millions | |
| Income taxes paid, net of refunds | 56 | 127 | 84 |
| Interest paid | 103 | 111 | 112 |
| A. | The reporting entity |
ICL Group Ltd. (hereinafter – the Company), is a company domiciled and incorporated in Israel. The Company's shares are traded on both the Tel-Aviv Stock Exchange (TASE) and the New York Stock Exchange (NYSE). under the ticker: ICL. The address of the Company’s registered headquarterheadquarters is 23 Aranha St., Tel‑Aviv, Israel. The Company is a subsidiary of Israel Corporation Ltd., a public company traded on the TASE.TASE under the ticker: ILCO:TA. The Company together with its subsidiaries, associated companies and joint ventures (hereinafter – the Group or ICL), is a leading specialty minerals group that operates a unique, integrated business model. The Company competitively extracts certain minerals as raw materials and utilizes processing and product formulation technologies to add value to customers in two main end-markets: agriculture and Industrial (including food additives). ICL’s products are used mainly in the areas of agriculture, electronics, food, fuel and gas exploration, water purification and desalination, detergents, cosmetics, medicinespharmaceuticals, and vehicles.automotive.
The State of Israel holds a Special State Share in ICL and in some of its subsidiaries, entitling the State the right to safeguard the State of Israel interests (seevital interests. For additional information, see Note 21).19 - Equity.
| B. | Impact of the COVID-19 spread |
The COVID-19 pandemic continues to create business and economic uncertainty and volatility in the global markets. Many countries around the world are experiencing further outbreaks of the pandemic, following which governments are once again imposing various restrictions. At the same time, there is a recovery trend in the volume of economic activity around the world that leads on one hand, to significant demand for certain products and services and on the other hand, disruptions to worldwide supply chain routes and some raw materials. The Company continues to take measures to ensure the health and safety of its employees, suppliers, other business partners and the communities in which it operates in order to ensure, among others, the operation level, the proper functioning of its facilities around the world and to minimize the pandemic's potential impact on its business. Manufacturing continues at the Company's sites around the world without interruptions. However, there is still a difficulty in assessing the future impacts of the pandemic on the Company's operations, inter alia, in light of the uncertainty of its duration, the extent of its intensity and effects on global supply chains and global markets, and additional countermeasures that may be taken by governments and central banks.
ICL Group LimitedConsolidated Financial Statements8
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 1 – General (cont'd)
Definitions |
| 1. | Subsidiary – a company over which the Company has control and the financial statements of which are fully consolidated with the Company's statements as part of the consolidated financial statements. |
| 2. | Investee company – Subsidiaries, |
| 3. | Related party – |
Note 2 - Basis of Preparation of the Financial Statements
| A. | Statement of compliance with International Financial Reporting Standards |
The consolidated financial statements have beenwere prepared by ICL in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Boards (IASB).
The consolidated financial statements were authorized for issuance by the Company’s Board of Directors on February 26, 2019.22, 2022.
| B. | Functional and presentation currency |
The consolidated financial statements are presented in United States Dollars (“US Dollars”; $), which is the functional currency of the Company and have been rounded to the nearest million, except when otherwise indicated.
Items included in the consolidated financial statements of the Company are measured using the currency of the primary economic environment in which the individual entity operates (“the functional currency”).
| C. | Basis of measurement |
The consolidated financial statements were prepared using the depreciated historical cost basis except for the following assets and liabilities: derivativeFinancial instruments measured at fair value through profit or loss, financial instruments non-current assets held-for-sale,measured at fair value through other comprehensive income, Investments in associates, and joint ventures, deferred tax assets and liabilities, provisions and assets and liabilities in respect of employee benefits.
For further information regarding the measurement of assets and liabilities, see Note 3 below.3.
ICL Group LimitedConsolidated Financial Statements9
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 2 - Basis of Preparation of the Financial Statements (cont'd)
| D. | Operating cycle |
The Company’s regular operating cycle is up to one year. As a result, the current assets and the current liabilities include items for which the realization of which is intended and anticipated to take place within one year.
| E. | Classifications |
The Company made a number of estimates and judgmentinsignificant adjustments to the classification of comparative figures in order to adjust them to the manner of classification in the current financial statements. The said classifications have no effect on the total profit (loss).
| F. | Use of estimates and judgment |
The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
The evaluation of accounting estimates used in the preparation of ICL’s financial statementsFinancial Statements requires management of the CompanyCompany's management to make assumptions regarding interpretations of laws interpretations which apply to the Company, circumstances and events that involveinvolving considerable uncertainty. Management of the CompanyThe Company's management prepares the estimates based on past experience, various facts, external circumstances, and reasonable assumptions based onrelating to the pertinent circumstances of each estimate. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
ICL Group LimitedConsolidated Financial Statements10
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2 - Basis of Preparation of the Financial Statements (cont'd)
| F. | Use of estimates and judgment (cont'd) |
Information about assumptions made by ICL with respect to the future and other reasons for uncertainty with respect to estimates that have a significant risk of resulting in a material adjustment to carrying amounts of assets and liabilities in the nextfuture financial yearyears are included in the following table:
Estimate | Principal assumptions | Possible effects | Reference | |
Concessions, permits and business licenses | Forecast of | Impact on the | See Note | |
Recoverable amount of a cash generating unit, among other things, containing goodwill | Expected cash-flow forecasts including estimates of mineral reserves, discount rate, market risk and the forecasted growth rate. | Change in impairment valuation. | See Note 12 - impairment testing. | |
Uncertain tax positions | The extent of the certainty that ICL’s tax positions will be accepted | Recognition of additional income tax expenses. | See Note | |
Whether it is more likely than not that an outflow of economic resources will be required in respect of potential liabilities under the environmental protection laws and legal claims pending against ICL and the estimation of their amounts. The waste removal/ restoration obligations depend on the reliability of the estimates of future removal costs and interpretation of regulations. | A change in the Company's estimated provisions for a claim and/or environmental liability, including | See Note | ||
ICL Group LimitedConsolidated Financial Statements11
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 3 - Significant Accounting Policies
The accounting policies in accordance with IFRS are consistently applied by ICL companies for all the periods presented in these consolidated financial statements.
Basis for Consolidation |
| 1. | Business combinations |
ICL implements the acquisition method to all business combinations. The acquisition date is the date on which the acquirer obtains control over the acquiree. Control exists when ICL is exposed or has rights to variable returns from its involvement with the acquiree and it could affect those returns through its power over the acquiree. Substantive rights held by ICL and others are considered when assessing control.
ICL recognizes goodwill on an acquisition according to the fair value of the consideration transferred including any amounts recognized in respect of non-controlling interest in the acquiree as well as the fair value at the acquisition date of any pre-existing equity right of ICL in the acquiree, less the net amount of the identifiable assets acquired, and the liabilities assumed.
Costs associated with the acquisition that were incurred by ICL in a business combination such as finder’s fees, advisory, legal, valuation and other professional or consulting fees, other than those associated with an issue of debt or equity instruments connected to the business combination, are expensed in the period the services are received.
| 2. | Subsidiaries |
Subsidiaries are entities controlled by ICL. The financial statements of the subsidiaries are included in the consolidated financial statements from the date control commenced until the date control ceases to exist. The accounting policiesfinancial statements of subsidiaries have been changed when necessary to align them with theICL's accounting policies adopted by ICL.policies.
| 3. | Non-controlling interests |
Non-controlling interests comprise of the subsidiary's equity that cannot be attributed, directly or indirectly, to the parent companycompany. Profit or loss and they include additional components such as:any part of other comprehensive income are allocated to the equity componentowners of convertible debenturesthe Company and the non-controlling interests, even if the result is a negative balance of subsidiaries, share-based payments that will be settled with equity instruments of subsidiaries and share options of subsidiaries.non-controlling interests.
Measurement of non-controlling interests on the date of the business combination – Non‑controlling interests that are instruments that give rise to a present ownership interest and entitle the holder to a share of net assets in the event of liquidation, (for example: ordinary shares), are measured at the date of the business combination at either fair value, or at their proportionate interest in the identifiable assets and liabilities of the acquiree, on a transaction-by-transaction basis.
Transactions with non-controlling interests, while retaining control - Transactions with non-controlling interests while retaining control are accounted for as equity transactions. Any difference between the consideration paid or received and the change in non‑controlling interests is included in the share of the owners of the Companycompany directly in a separate category in equity.
ICL Group LimitedConsolidated Financial Statements12
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 3 - Significant Accounting Policies (cont'd)
Basis for Consolidation (cont'd) |
| 4. | Loss of control |
Upon the loss of control, ICL derecognizes the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. If ICL retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. The difference between the sum of the proceeds and fair value of the retained interest, and the derecognized balances is recognized in profit or loss underas other income or other expenses. Subsequently the retained interest is accounted for as an equity-accounted investee or as a financial asset in accordance with the provisions of IFRS 9, depending on the level of influence retained by ICL in the relevant company. The amounts recognized in capital reserves through other comprehensive income with respect to the same subsidiary are reclassified to profit or loss or to retained earnings.
Transactions eliminated in consolidation |
Intra-group balances, and transactions, and any unrealized income and expenses and gains and losses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealized gains arising from transactions with associates and joint ventures are eliminated against the investment to the extent of ICL’s interest in these investments. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.
Investment in |
Joint ventures are joint arrangements in which ICL has rights to the net assets of the arrangement. Associates and joint ventures are accounted for using the equity method (equity accounted investees) and are recognized initially at cost. The cost of the investment includes transaction costs.
| B. | Foreign Currency |
| 1. | Transactions in foreign currency |
Transactions in foreign currency are translated to the functional currency of the Company and each of its subsidiaries based on the exchange rate in effect on the dates of the transactions. Monetary assets and liabilities denominated in foreign currency on the report date are translated into the functional currency of the Company and each of its subsidiaries based on the exchange rate in effect on that date. Exchange rate differences in respect of monetary items are the difference between the net book value in the functional currency at the beginning of the year adjusted for effective interest and payments during the year, plus the payments during the year and the net book value in foreign currency translated based on the rate of exchange at the end of the year. Exchange rate differences deriving from translation into the functional currency are recognized in the consolidated statement of income.
Non‑monetary items denominated in foreign currency and measured in terms ofat historical cost are translated using the exchange rate at the date of the transaction.
| 2. | Foreign operations |
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising onfrom acquisition, are translated to USD at exchange rates at the reporting date. The income and expenses of foreign operations are translated to USD at exchange rates at the dates of the transactions. Foreign currency differences are recognized in other comprehensive income and are presented in equity in the foreign currency translation reserve (hereinafter –Translation Reserve).
When the foreign operation is a non-wholly-ownednon-wholly owned subsidiary of the Company, then the relevant proportionate share of the foreign operation translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of, such that control, significant influence or joint control is lost, the cumulative amount in the Translation Reserve related to that foreign operation is reclassified to profit or loss as a part of the capital gain or loss on disposal. Furthermore, when ICL’s interest in a subsidiary that includes a foreign operation changes, while retaining control in the subsidiary, a proportionate part of the cumulative amount of the translation difference that was recognized in other comprehensive income is reattributed to non-controlling interests.
ICL Group LimitedConsolidated Financial Statements13
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 3 - Significant Accounting Policies (cont’d)(cont'd)
| B. | Foreign Currency (cont'd) |
Foreign operations (cont'd) |
Generally, foreign currency differences from a monetary item receivable from or payable to a foreign operation, including foreign operations that are subsidiaries, are recognized in profit or loss in the consolidated financial statements. Foreign exchange gains andor losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are recognized in other comprehensive income and are presented within equity in the Translation Reserve.
| C. | Financial Instruments |
| 1. | Non-derivative financial assets (IFRS9) |
Initial recognition of financial assets:
ICL initially recognizes trade receivables and debt instruments issued on the date that they are originated. Alloriginated and for all other financial assets are recognized initially onat the trade date atin which ICL becomes a party to the contractual provisions of the instrument. A financial asset is initially measured at fair value plus direct transaction costs that are directly attributable to the acquisition or issuance of the financial asset. A trade receivable without a significant financing component is initially measured at the transaction price. Receivables originating from contract assets are initially measured at the carrying amount of the contract assets on the date classification was changed from contract asset to receivables.costs.
Derecognition of financial assets:
Classification of financial assets into categories and the accounting treatment of each categorycategory:
Financial assets are classified at initial recognition to one of the following measurement categories: (1) amortized cost; (2) fair value through other comprehensive income – investments in debt instruments; (3) fair value through other comprehensive income – investments in equity instruments; or (4) fair value through profit or loss. FinancialThe reclassification of the financial assets are not reclassified in subsequent periods unless, andwill only occur if ICLICL's changes its business model for the management of financial debt assets in which case the affected financial debt assets are reclassified at the beginning of the period following the change in the business model.
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated at fair value through profit or loss: (1) It is held within a business model whose objective is to hold assets so as to collect contractual cash flows; and (2) the contractual terms of the financial asset give rise to cash flows representing solely payments of principal and interest on the principal amount outstanding on specified dates. These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.
ICL Group LimitedConsolidated Financial Statements14
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 3 - Significant Accounting Policies (cont'd)
| C. | Financial Instruments (cont'd) |
| 1. | Non-derivative financial assets (IFRS9) (cont'd) |
ICL has balances of trade and other receivables and deposits that are held within a business model whose objective is collecting contractual cash flows, which represent solely payments of principal and interest (for the time value and the credit risk). Accordingly, these financial assets are measured at amortized cost.
| 2. | Non-derivative financial liabilities |
Non-derivative financial liabilities include bank overdrafts, loans and borrowings from banks and others, marketable debt instruments, finance lease liabilities, and trade and other payables.
ICL initially recognizes debt securities issued on the date that they originated. All other financial liabilities are recognized initially on the trade date at which ICL becomes a party to the contractual provisions of the instrument.
Derecognition of the financial liabilities:
Change in terms of debt instruments:
In a non-substantial modification of terms (or exchange) of debt instruments, the new cash flows are discounted using the original effective interest rate, and the difference between the present value of the new financial liability and the present value of the original financial liability is recognized in profit or loss.
ICL Group LimitedConsolidated Financial Statements15
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 3 - Significant Accounting Policies (cont’d)
Financial Instruments (cont'd) |
| 2. | Non-derivative financial liabilities (cont'd) |
Offset of financial instruments:
Financial assets and liabilities are offset, and the net amount is presented in the statement of financial position when, and only when, ICL currently has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
| 3. | Derivative financial instruments |
ICL holds derivative financial instruments in order to reduce exposure to foreign currency risks, risks with respect to commodity prices, marine shipping prices, and interest risks.interest. Derivatives are recognized according to fair value and the changes in value are recorded in the statement of income as financing income or expense, except for derivatives used to hedge cash flows (accounting hedging). The attributable transaction costs are recorded in the statement of income as incurred. Changes in the fair value of the derivatives are recorded in the statement of income, except for derivatives used to hedge cash flows, as detailed below.
Cash flow hedges
Changes in the fair value of derivatives used to hedge cash flows, in respect ofaccordance with the effective portion of the hedge, are recorded through other comprehensive income directly in a hedging reserve. With respect to the non‑effective part, changes in the fair value are recognized in the statement of income. The amount accumulated in the capital reserve is reclassified and included in the statement of income in the same period as the hedged cash flows affected profit or loss under the same line item in the statement of income as the hedged item. Where the hedged item is a non-financial asset, the amount recorded in the capital reserve is transferred to the book value of the asset, upon recognition thereof.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is discontinued prospectively.discontinued. The cumulative gain or loss remains in the other comprehensive income and is presented in the hedging reserve in equity remains there until the forecasted transaction occurs or is no longer expected to occur and then will beis reclassified to the profit or loss.statements of income.
| CPI-linked assets and liabilities not measured at fair value |
The value of index-linked financial assets and liabilities, which are not measured at fair value, is re-measuredre‑measured every period in accordance with the actual increase/ decrease in the CPI.
| 5. | Share capital |
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognized as a deduction from equity, net of any tax effects.
Incremental costs directly attributable to an expected issuance of an instrument that will be classified as an equity instrument are recognized as an asset in the statement of financial position. The costs are deducted from the equity upon the initial recognition of the equity instruments or are amortized as financing expenses in the statement of income when the issuance is no longer expected to take place.
Treasury shares
ICL Group LimitedConsolidated Financial Statements16
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 3 - Significant Accounting Policies (cont’d)(cont'd)
Property, plant and equipment
| 1. | Recognition and measurement |
Property, plant and equipment in the consolidated statements are presented at cost less accumulated depreciation and provision for impairment. The cost includes expenses that can be directly attributed to the acquisition of the asset after deducting the related amounts of government grants. The cost of assets that were self-constructed includes the cost of the materials and direct labor, as well as any additional costs that are directly attributable to bringing the asset to the required position and condition so that it will be able to function as management intended, as well as an estimate of the costs to dismantle, remove and remove the items and to restore, its location, where there is an obligation to dismantle and remove or to restore the sitefor such, and capitalized borrowing costs. The cost of purchased software, which constitutes an inseparable part of operating the related equipment, is recognized as part of the cost of the equipment.
| 2. | Subsequent Costs (after initial recognition) |
The cost of replacing part of an item of property, plant and equipment and other subsequent costs areis recognized as part of the book value of the item, if it is expected that the future economic benefit inherent therein will flow to ICL and that its cost can be reliably measured. The book value of the part that was replaced is derecognized. Routine maintenance costs are charged to the statement of income as incurred.
Depreciation |
Depreciation is a systematic allocation of the depreciable amount of an asset over its estimated useful life. The depreciable amount is the cost of the asset, or other amount substituted for cost, less its residual value. Depreciation of an item of property, plant and equipment begins when the asset is available for its intended use, that is, when it has reached the place and condition required in order that it can be used in the manner contemplated for it by Management.
Depreciation is recorded in the statement of income according to the straight-line method over the estimated useful life of each significant component of the property, plant and equipment items, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Owned land is not depreciated.
The estimated useful life for the current period and comparative periods is as follows:
In Years | |
Buildings | 15 - 30 |
Technical equipment and | 5 - 33 |
Dikes and | 20 - 40 |
Other | |
3 - 10 |
(1) Mainly 2533 years
(2) Mainly 40 years
ICL Group LimitedConsolidated Financial Statements17
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 3 - Significant Accounting Policies (cont'd)
| D. | Property, plant and equipment (cont'd) |
| 3. | Depreciation (cont'd) |
The Company reviews, at least at the end of every reporting year, the estimates regarding the depreciation method, useful lives and the residual value, and adjusts them if appropriate. Once every five years, the Company actively examines the useful lives of the main property, plant and equipment items and, if required, updates them. Over the years, the Company has succeeded in maintainingto extend the useful lives of part of property, plant and equipment items –beyond the original estimated useful life, as a result of investments therein and other current, ongoing maintenance thereof.
Intangible Assets |
| 1. | Goodwill |
Goodwill recorded consequent to the acquisition of subsidiaries is presented at cost less accumulated impairment charges, under intangible assets.
| 2. |
| Research and development |
Expenditures for research activities are expensed as incurred.
Development expenditures are recognized as intangible asset only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and ICL has the intention and sufficient resources to complete development and to use or sell the asset. Other development expenditures costs are expensed as incurred. Subsequent to initial recognition, development expenditures are measured at cost less accumulated amortization and any accumulated impairment losses.
Other intangible assets |
Other intangible assets purchased by ICL, with a defined useful life, are measured according to cost less accumulated amortization and accumulated losses from impairment. Intangible assets with indefinite useful lives are measured according to cost less accumulated losses from impairment.
Subsequent costs |
Subsequent costs are recognized as an intangible asset only when they increase the future economic benefit inherent in the asset for which they were incurred. All other costs including costs relating to goodwill or trademarks developed independently, are charged to the statement of income as incurred.
Amortization |
Amortization is a systematic allocation of the amortizable amount of an intangible asset over its useful life. The amortizable amount is the cost of the asset less its residual value. Amortization is recorded in the statement of income according to the straight-line method from the date the assets are available for use, over the estimated useful economic life of the intangible assets, except for customer relationships and geological surveys, which are amortized according to the rate of consumption of the economic benefits expected from the asset based on cash flow forecasts.
ICL Group LimitedConsolidated Financial Statements18
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 3 - Significant Accounting Policies (cont'd)
| E. | Intangible Assets (cont'd) |
| 5. | Amortization (cont'd) |
Goodwill and intangible assets having an indefinite lifespan are not amortized on a systematic basis but, rather, are examined at least once a year for impairment in value.
Internally generated intangible assets are not systematically amortized as long as they are not available for use, i.e. they are not yet on site or in working condition for their intended use. Accordingly, these intangible assets, such as development costs, are tested for impairment at least once a year, until such date as they are available for use.
The estimated useful life for the current period and comparative periods is as follows:
In Years | |
Concessions and mining rights – over the remaining duration of the rights granted | |
Trademarks | 15 - 20 |
Technology / patents | 7 - 20 |
Customer relationships | 15 - 25 |
Computer applications | |
3 - 10 |
ICL periodically examines the estimated useful life of an intangible asset that is not amortized, at least once a year, in order to determine if events and circumstances continue to support the determination that the intangible asset has an indefinite life.
Deferred expenses in respect of geological surveys are amortized over their useful life based on a geological estimate of the amount of the material that will be produced from the mining site.
The estimates regarding the amortization method and useful life are reviewed, at a minimum, at the end of every reporting year and are adjusted where necessary. ICL assesses the useful life of the customer relationships on an ongoing basis, based on an analysis of all the relevant factors and evidence, considering the experience the Company has with respect to recurring orders and churn rates and considering the future economic benefits expected to flow to the Company from these customer relationships.
| F. | Inventories |
Inventories are measured at the lower of cost or net realizable value. The cost of the inventories includes the costs of purchasing the inventories and bringing itthem to itstheir present location and condition. In the case of work in process and finished goods, the cost includes the proportionate part of the manufacturing overhead based on normal capacity. Net realizationrealizable value is the estimated selling price in the ordinary course of business, after deduction of the estimated cost of completion and the estimated costs required to execute the sale.
The cost of the inventories of raw and auxiliary materials, maintenance materials, finished goods and goods in process, is determined mainly according to the “moving average” method.
ICL Group LimitedConsolidated Financial Statements19
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 3 - Significant Accounting Policies (cont'd)
| F. | Inventories (cont'd) |
If the benefit from stripping costs (costs of removing waste produced as part of a mine's mining activities during its production stage) is attributable to inventories, the Company accounts for these stripping costs as inventories. In a case where the benefit is improved access to the quarry, the Company recognizes the costs as a non‑current addition to the asset, provided the criteria presented in IFRIC 20 are met. Inventories which are expected to be sold in a period of more than 12 months from the reporting date are presented as non-current inventories, as part of non-current assets.
| G. | Capitalization of Borrowing Costs |
A qualifying asset is an asset that requires a significant period of time to prepare for its intended use or sale. Specific and non-specific borrowing costs are capitalized to qualifying assets during the period required for their completion and establishment, until the time when they are ready for their intended use. Other borrowing costs are charged to "financing expenses" in the statement of income as incurred.
| H. | Impairment |
| 1. | Non-derivative financial assets |
Provision for expected credit losses in respect of a financial asset at amortized cost, including trade receivables, will beis measured at an amount equal to the full lifetime of expected credit losses. Expected credit losses are a probability-weighted estimate of credit losses. With respect to other debt instruments, provision for expected credit losses will beis measured at an amount equal to 12-month expected credit losses, unless their credit risk has increased significantly since initial recognition. Provision for such losses in respect of a financial asset at amortized cost, will beis presented net of the gross book value of the asset.
| 2. | Non-financial assets |
In everyeach reporting period, an examination is made with respect to whether there are signs indicating impairment in the value of ICL’s non-financial assets, other than inventories and deferred tax assets. If such signs exist, the estimated recoverable amount of the asset is calculated. ICL conducts an annual examination, on the same date, of the recoverable amount of goodwill and intangible assets with indefinite useful lives or those that are not available for use – or more frequently if there are indications of impairment.
Assets that cannot be tested individually are grouped together into the smallest group of assets that generatesgenerate cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). Goodwill is not monitored for internal reporting purposes and, accordingly, it is allocated to the Company’s operating segments and not to the cash- generating units, the level of which is lower than the operating segment.
The recoverable amount of an asset or a cash- generatingcash-generating unit is the higher of its value in use or the net selling price (fair value less cost of disposal). When determining the value in use, ICL discounts the anticipated future cash flows according to aan after-tax discount rate that reflects the evaluations of the market's participants regarding the time value of money and the specific risks relating to the asset or to the cash- generatingcash-generating unit, in respect of which the future cash flows expected to derive from the asset or the cash- generatingcash-generating unit were not adjusted.
ICL Group LimitedConsolidated Financial Statements20
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 3 - Significant Accounting Policies (cont'd)
| H. | Impairment (cont'd) |
| 2. | Non-financial assets (cont'd) |
Assets of the Company's headquarters and administrative facilities do not produce separate cash flows and they serve more than one cash-producingcash-generating unit. Such assets are allocated to cash‑producingcash-generating units on a reasonable and consistent basis and are examined for impairment as part of the examination of impairment of the cash‑producingcash-generating units to which they are allocated.
Impairment losses are recognized if the carrying amount of an asset or cash-producingcash-generating unit in the books exceeds its estimated recoverable amount and are recognized in the statement of income. For operating segments that include goodwill, an impairment loss is recognized when the book value of the operating segment in the books exceeds its recoverable value. Impairment losses recognized in respect of an operating segment are allocated first to reduce the carrying amount of its goodwill and then to reduce the carrying amounts of the other assets of that segment on a proportionate basis.
An impairment loss is allocated between the owners of the Company and the non-controlling interests on the same basis that the profit or loss is allocated.
A loss from impairment in value of goodwill recognized in previous periods is not reversible prospectively. A loss from impairment of other assets recognized in previous periods is examined in future periods to assess whether there are signs indicating that these losses have decreased or no longer exist. A loss from impairment of value is reversed if there is a change in the estimates used to determine the recoverable value, only if the book value of the asset, after reversal of the loss from impairment of value, does not exceed the book value, after deduction of depreciation or amortization, that would have been determined if the loss from impairment of value had not been recognized.
| I. | Employee Benefits |
ICL has several post-employment benefit plans. The plans are funded partly by deposits with insurance companies, financial institutions or funds managed by a trustee. The plans are classified as defined contribution plans and as defined benefit plans.
| 1. | Defined contribution plans |
A defined contribution plan is a post-employment benefit plan under which ICL pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts.
ICL’s obligation to make depositsdeposit in a defined contribution plan is recorded as an expense in the statement of income in the periods duringin which the employees provided the services. Contributions to a defined contribution plan, that are due more than 12 months after the end of the period in which the employees render the service are discounted to their present value.
ICL’s net obligation regarding defined benefit plans for post-employment benefits, is calculated for each plan separately, by estimating the future amount of the benefit to which an employee will be entitled as compensation for services in the current and past periods. The benefit is presented at present value after deducting the fair value of the planplan's assets. The discount rate for ICL companies operating in countries having a “deep” market wherein there is afor high level of trading inquality corporate bonds is in accordance with the yield on thesuch corporate bonds, including Israel.
ICL Group LimitedConsolidated Financial Statements21
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 3 - Significant Accounting Policies (cont'd)
| I. | Employee Benefits (cont'd) |
| 1. | Defined contribution plans (cont'd) |
The discount rate for ICL companies operating in countries not having a “deep” market wherein there is afor high level of trading inquality corporate bonds as stated above, is in accordance with the yield on government bonds – the currency and redemption date of which are similar to the terms binding ICL. The calculations are performed by a qualified actuary using the projected unit credit method.
| 2. | Defined benefit plans |
When a net asset is created for ICL, the asset is recognized up to the net present value of the available economic benefits in the form of a refund from the plan or by a reduction in future deposits to the plan. An economic benefit in the form of a refund from the plan or a reduction in future deposits will be considered available when it can be realized in the lifetime of the plan or after settlement of the obligation.
The movement in the net liability in respect of a defined benefit plan that is recognized in every accounting period in the statement of income is comprised of the following: (1) Current service costs – the increase in the present value of the liability deriving from employees’ service in the current period; (2) The net financing income (expense) is calculated by multiplying the net defined benefit liability (asset) by the discount rate used for measuring the defined benefit liability, as determined at the beginning of the annual reporting period; (3) Exchange rate differences; (4) Past service costs and plan reduction – the change in the present value of the liability in the current period as a result of a change in post-employment benefits attributed to prior periods.
The difference, as atof the date of the report, between the net liability at the beginning of the year plus the movement in profit and lossthe net liability as detailed above, and the actuarial liability less the fair value of the fund assets at the end of the year, reflects the balance of the actuarial income or expenses recognized in other comprehensive income and is recorded in retained earnings. The current interest costs and return on plan assets are recognized as expenses and interest income in the respective financing category. Costs in respect of past services are recognized immediately and without reference to whether the benefits have vested.
| 3. | Other long-term employee benefits |
Some of the Company’s employees are entitled to other long-term benefits that do not relate to a post-retirement benefit plan. Actuarial gains and losses are recorded directly to the statement of income in the period in which they arise.
ICL Group LimitedConsolidated Financial Statements22
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 3 - Significant Accounting Policies (cont’d)
| I. | Employee Benefits (cont'd) |
| 4. | Early Retirement Pay |
Early retirement pay is recognized as an expense and as a liability when ICL has clearly undertaken to pay it, without any reasonable chance of cancellation, in respect of termination of employees, before they reach the customary age of retirement according to a formal, detailed plan. The benefits provided to employees upon voluntary retirement are charged when ICL proposes athe plan to the employees, encouraging voluntary retirement, it is expected that the proposal will be accepted, and it is possible to reliably estimate the number of employees that will accept the proposal. If benefits are payable more than 12 months after the reporting period, then they are discounted to their present value. The discount rate is the yield at the reporting date on high-quality, index-linked corporate debentures, the denominated currency of which is the payment currency, and that have maturity dates approximating the terms of ICL’s obligations.
| 5. | Short‑term benefits |
Obligations for short-term employee benefits are measured on a non-discounted basis, and the expense is recorded at the time the service is provided or upon the actual absence of the employee when the benefit is not accumulated (such as maternity leave).
A provision for short-term employee benefits in respect of cash bonuses or profit-sharing plans is recognized for the amount expected to be paid, when ICL has a current legal or implied obligation to pay for the services provided by the employee in the past and it is possible to reliably estimate the obligation.
Classification of employee benefits as a short‑term employee benefit or a long‑term employee benefit (for measurement purposes) is determined based on ICL's expectation with respect to full utilization of the benefits and not based on the date on which the employee is entitled to utilize the benefit.
| 6. | Share-based compensation |
The fair value on the grant date of share-based compensation awards granted to employees is recognized as a salary expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognized as an expense in respect of share-based compensation awards that are conditional upon meeting vesting conditions that are service conditions and non-market performance conditions, is adjusted to reflect the number of awards that are expected to vest.
| J. | Provisions |
A provision is recognized when ICL has a present legal or implied obligation, as the result of an event that occurred in the past, that can be reliably estimated, and when it is expected that an outflow of economic benefits will be required in order to settle the obligation. The provisions are made by means of discounting of the future cash flows at a pre-tax interest rate reflecting the current market estimates of the time value of money and the risks specific to the liability, and without considering the Company’s credit risk. TheICL reviews its provisions in each reporting period and adjusts if necessary. In order to reflect the length of time that has elapsed, the book value of the provision is adjusted in everyeach period in order to reflect the amount of time that has elapsed and is recognized as financing expenses. In rare cases where it is not possible to estimate the outcome of a potential liability, no provision is recorded in the financial statements.
ICL Group LimitedConsolidated Financial Statements23
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 3 - Significant Accounting Policies (cont'd)
| J. | Provisions (cont'd) |
ICL recognizes a reimbursement asset if, and only if, it is virtually certain that the reimbursement will be received if the Company settles the obligation. The amount recognized in respect of the reimbursement does not exceed the amount of the provision.
| (1) | Warranty |
A provision for warranty is recognized when the products or services, in respect of which the warranty is provided, are sold. The provision is based on historical data and on a weighting of all possible outcomes according to their probability of occurrence.
| (2) | Provision for environmental costs |
ICL recognizes a provision for an existing obligation for prevention of environmental pollution and anticipated provisions for costs relating to environmental restoration stemming from current or past activities.
Costs for preventing environmental pollution that increase the life expectancy or efficiency of a facility or decrease or prevent the environmental pollution are recorded as a provision, are capitalized to the cost of the property, plant and equipment and are depreciated according to the usual depreciation rates used by ICL.
| (3) | Restructuring |
A provision for restructuring is recognized when ICL has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly. The provision includes direct expenditures caused by the restructuring and necessary for the restructuring, and which are not associated with the continuing activities of ICL.
| (4) | Site restoration |
A provision for sitereclamation and restoration in respect of contaminated land, and the related expense,ICL's sites is recognized when the land is contaminated.Company has a legal obligation which could arise, among others, from environmental regulations.
| (5) | Legal claims |
A provision for legal claims is recognized when ICL has a present legal or constructive obligation as a result of an event that occurred in the past, if it is more likely than not that an outflow of economic resources will be required to settle the obligation and it can be reliably estimated. Where the time value is significant, the provision is measured based on its present value.
| K. | Revenue Recognition |
Identifying a contract
ICL accounts for a contract with a customer only when the following conditions are met:
| (a) The parties to the contract have approved the contract and they are committed to satisfying the obligations attributable to them; (b) ICL can identify the rights of each party in relation to the goods that will be transferred; (c) ICL can identify the payment terms for the goods that will be transferred; (d) The contract has a commercial substance (i.e. the risk, timing and amount |
ICL Group LimitedConsolidated Financial Statements24
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 3 - Significant Accounting Policies (cont’d)(cont'd)
| K. | Revenue Recognition (cont'd) |
Identifying a contract (cont'd)
Identifying performance obligations
ICL is a global specialty minerals and chemicals company engaged in the sale of various goods produced in its different segments of operation. ICL's contracts primarily derived from a single performance obligation any promise to transfer todeliver the customer one of the following:
Determining the transaction price
Satisfaction of allperformance obligation
Revenue is recognized at the following elementspoint in time, when determining the transaction price: variable consideration, the existence of a significant financing component, non-cash consideration, and consideration payableCompany transfers control over promised goods to the customer. As The transfer of control over goods to a customer generally takes place upon shipment or when accepted by the customer, as provided for in the sales contract.
Payment terms
ICL does nothas various payment terms which are aligned with the acceptable commercial conditions in the relevant markets. ICL's policy is to engage in agreements with payment terms not exceeding one year, itand applies the practical expedient included in the standard to not separate a significant financing component where the difference between the time of receiving payment and the time of transferring the goods or services to the customer is one year or less.
| L. | Government grants |
Government grants are recognized initially at fair value when there is reasonable assurance that they will be received, and the Group will comply with the conditions associated with the grant. Unconditional government grants are recognized when the Group is entitled to receive them. Grants that compensate the Group for expenses incurred are presented as a deduction from the corresponding expense. Grants that compensate the Group for the cost of an asset are presented as a deduction from the related assets and are recognized in profit or loss on a systematic basis over the useful life of the asset.
ICL Group LimitedConsolidated Financial Statements25
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 3 - Significant Accounting Policies (cont'd)
| M. | Leases |
Determining whether an arrangement contains a lease
On the inception date of the lease, ICL determines whether the arrangement is a lease or contains a lease, while examining if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In its assessment of whether an arrangement conveys the right to control the use of an identified asset, ICL assesses whether it has the following two rights throughout the lease term: (a) the right to obtain substantially all the economic benefits from use of the identified asset; and (b) the right to direct the identified asset’s use.
For lease contracts that contain non-lease components, such as services or maintenance, that are related to a lease component, ICL elected to account for the contract as a single lease component without separating the components.
Leased assets and lease liabilities:
Contracts that award ICL control over the use of a leased asset for a period of time in exchange for consideration, are accounted for as leases. Upon initial recognition ICL recognizes a liability at the present value of the balance of future lease payments, and concurrently recognizes a right-of-use asset at the same amount of the lease liability, adjusted for any prepaid or accrued lease payments, plus initial direct costs incurred in respect of the lease. Subsequent to initial recognition, the right-of-use asset is accounted for using the cost model and depreciated over the shorter of the lease term or useful life of the asset.
ICL has elected to apply the practical expedient by which short-term leases of up to one year and/or leases in which the underlying asset has a low value, are recognized in profit or loss on a straight-line basis, over the lease term, without recognizing an asset and/or liability in the statement of financial position.
The lease term is the non-cancellable period of the lease plus periods covered by an extension or termination option if it is reasonably certain that the lessee will or will not exercise the option, respectively.
Variable lease payments that depend on an index or a rate, are initially measured using the index or rate existing at the commencement of the lease and are included in the measurement of the lease liability. When the cash flows of future lease payments change as the result of a change in an index or a rate, the balance of the liability is adjusted against the right-of-use asset. Other variable lease payments that are not included in the measurement of the lease liability are recognized in profit or loss in the period in which the event or condition that triggers payment occurs.
After lease commencement, a right-of-use asset is measured on a cost basis less accumulated depreciation and accumulated impairment losses. Depreciation is calculated on a straight-line basis over the useful life or contractual lease period, whichever earlier.
ICL Group LimitedConsolidated Financial Statements26
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 3 - Significant Accounting Policies (cont'd)
| M. | Leases (cont'd) |
Sale and leaseback:
ICL applies the requirements of IFRS 15 to determine whether an asset transfer is accounted for as a sale. If an asset transfer satisfies the requirements of IFRS 15 to be accounted for as a sale, ICL measures the right-of-use asset arising from the leaseback at the proportion of the previous carrying amount that relates to the right of use retained by ICL. Accordingly, ICL only recognizes the amount of gain or loss that relates to the rights transferred.
If the asset transfer does not satisfy the requirements of IFRS 15 to be accounted for as a sale, the transaction is accounted for as a financing transaction. Insofar as ICL is the seller-lessee of the asset, it continues to recognize the transferred asset and recognizes a financial liability in accordance with IFRS 9, at an amount equal to the transferred proceeds.
| N. | Financing Income and Expenses |
Financing income includes income from interest on amounts invested, gains from derivative financial instruments recognized in the statement of income, andforeign currency gains, gains on changes in the disposalfair value of available-for-sale financial assets.assets at fair value through profit or loss and financing income recorded in relation to employee benefits. Interest income is recognized as accrued, using the effective interest method.
Financing expenses include interest on loans received, changes in the time value of provisions, securitization transaction costs, losses from impairment or disposal of available for sale financial assets, losses from derivative financial instruments, changes due to the passage of time in liabilities in respect of defined benefit plans for employees less interest income deriving from plan assets of a defined benefit plan for employees and losses from exchange rate differences. Borrowing costs, which are not capitalized, are recorded in the income statement using the effective interest method.
Gains and losses from exchange rate differences and from derivative financial instruments are reported on a net basis, as financing income or financing expenses, based on the fluctuation in the exchange rates and based on their position (net gain or loss).basis.
In the consolidated statements of cash flows, interest received and interest paid, are presented as part of cash flows from operating activities. Dividends paid are presented as part of cash flows from financing activities.
| O. | Taxes on Income |
Taxes on income (including surplus profit levy on natural resources) include current and deferred taxes. Current tax and deferred taxtaxes, that are recognized in profit or loss, unless they relate to a business combination or are recognized directly in equity or in other comprehensive income when they relate to items recognized directly in equity or in other comprehensive income.
Current tax is the expected tax payable (or receivable) on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date. Current taxes also include taxes in respect of prior years and any tax arising from dividends. Current tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and there is intent to settle current tax liabilities and assets on a net basis or the tax assets and liabilities will be realized simultaneously.basis.
A provision for uncertain tax positions, including additional tax and interest expenses, is recognized when it is more likely than not that ICL will have to use its economic resources to pay the obligation.
ICL Group LimitedConsolidated Financial Statements27
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 3 - Significant Accounting Policies (cont'd)
| O. | Taxes on Income (cont'd) |
Recognition of deferred taxes relates to temporary differences between the book values of the assets and liabilities for purposes of financial reporting and their value for tax purposes. The Company does not recognize deferred taxes for the following temporary differences: initial recognition of goodwill initial recognition of assets and liabilities for transactions that do not constitute a business combination and do not impact the accounting income and the income for tax purposes, as well as differences deriving from investments in subsidiaries, investee companies and associated companies that are presented according to equity method, if it is not expected that they will reverse in the foreseeable future and if ICL controls the date the provision will reverse, whether via sale or distribution of a dividend. The deferred taxes are measured according to the tax rates expected to apply to the temporary differences at the time they are realized, based on the law that was finally legislated or effectively legislated as atof the date of the report. Deferred taxes in respect of intra-company transactions in the consolidated financial statements are recorded according to the tax rate applicable to the buying company.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset deferred tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle deferred tax liabilities and assets on a net basis or their deferred tax assets and liabilities will be realized simultaneously.basis.
A deferred tax asset is recognized in the books when it is expected that in the future there will be taxable income against which the temporary differences can be utilized. Deferred tax assets are examined at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
ICL could become liable for additional taxes in the case of distribution of intercompany dividends between ICL's companies. These additional taxes are not included in the financial statements as ICL's companies decided not to cause distribution of a dividend that involves additional taxes to the paying company in the foreseeable future. In cases where an investee company is expected to distribute a dividend involving additional tax, the Company records a reserve for taxes in respect of the saidexpected additional tax it is expected to incur due to distribution of the dividend. Additional income taxes that arise from the distribution of dividends by the Company are recognized when the liability to pay the related dividend is recognized. Deferred taxes in respect of intra-company transactions in the consolidated financial statements are recorded according to the tax rate applicable to the buying company.taxes.
| P. | Earnings per share |
ICL presents basic and diluted earnings per share data for its ordinary share capital. The basic earnings per share are calculated by dividing the income or loss attributable to the holders of the Company’s ordinary shares by the weighted-average number of ordinary shares outstanding during the year, after adjustment in respect of treasury shares. The diluted earnings per share are determined by adjusting the income or loss attributable to the holders of the Company’s ordinary shares and the weighted-average number of ordinary shares outstanding after adjustment in respect of treasury shares and for the effect of restricted shares and options for shares granted to employees.
| Q. | Transactions with controlling shareholder |
Assets and liabilities included in a transaction with a controlling shareholder are measured at fair value on the date of the transaction. As
ICL Group LimitedConsolidated Financial Statements28
Notes to the transaction is on the equity level, the Company includes the difference between the fair value and the consideration from the transaction in its equity.Consolidated Financial Statements as of December 31, 2021
Note 3 - Significant Accounting Policies (cont'd)
| R. | Non-current assets and disposal groups held for sale |
Non-current assets (or disposal groups composed of assets and liabilities) are classified as held for sale if it is highly probable that they will be recovered primarily through a sale transaction and not through continuing use. This applies also to when the Company is obligated to a sale plan that involves losing control over a subsidiary, whether the Company will retain any non-controlling interests in the subsidiary after the sale.
Immediately before classification as held for sale, the assets (or components of the disposal group) are remeasured in accordance with ICL’s accounting policies. Thereafter, the assets (or components of the disposal group) are measured at the lower of their carrying amount and fair value less costs to sell.
Any impairment loss on a disposal group is initially allocated to goodwill, and then to remaining assets on a pro rata basis, except that no loss is allocated to assets that are not in the scope of the measurement requirements of IFRS 5 such as: inventories, financial assets, deferred tax assets and employee benefit assets, which continue to be measured in accordance with ICL’s accounting policies. Impairment losses recognized on initial classification as held for sale, and subsequent gains or losses on remeasurement, are recognized inas profit or loss. Gains are not recognized in excess of any cumulative impairment loss. In subsequent periods, depreciable assets classified as held for sale are not depreciated on a periodic basis.
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 4 - Determination of Fair Values
As part of the accounting policies and disclosures, ICL is required to determine the fair value of both financial and non-financial assets and liabilities. The fair values have been determined for measurement and/or disclosure purposes based on the methods described below. Further information about the assumptions made in determining the fair values is disclosed in the notes specific to that asset or liability.
| A. | Investments in equity securities |
The fair value of financial assetsinvestments in equity instruments classified as fair value through other comprehensive income -investments- investments in equity instruments and as fair value through profit and loss, is determined based on their market price at date of the report. If the asset or liability measured at fair value has a bid price and an ask price, the price in the range between them that best reflects fair value under the circumstances will be used for measuring fair value.
| B. | Derivatives |
The fair value of forward contracts on foreign currency is determined by averaging the exchange rate and the appropriate interest coefficient for the period of the transaction and the relevant currency index.
Future contracts on energy and marine shipping prices are presented at fair value based on quotes of the prices of products on an ongoing basis.
The reasonableness of the market pricefair value is examined by comparing it to quotations by banks.banks’ quotations.
| C. | Liabilities in respect of debentures |
The fair value of the liabilities and theincluding debentures is determined for disclosure purposes only. The fair value of marketable debentures is determined based on the stock market prices as at the date of the report. The fair value of the non‑marketable debenturesonly and is calculated based on the present value of future cash flows in respect of the principal and interest components, discounted at the market rate of interest as atof the reporting date.
The fair value of employee share options and share appreciation rightsmarketable debentures is measured using the Black and Scholes model or a binomial model, in accordance with the plan (see Note 21). The model’s assumptions include the share pricedetermined based on the measurement date, exercise pricestock market prices as of the instrument, expected volatility (based on the weighted‑average historic volatility), the weighted average expected lifedate of the instruments (based on historical experience and general option‑holder behavior), expected dividends, and the risk-free interest rate (based on government debentures).report.
| D. | Property, plant and equipment of the subsidiaries Dead Sea Works, Dead Sea Bromine and Dead Sea Magnesium in Israel |
The fair value of property, plant and equipment of the subsidiaries Dead Sea Works, Dead Sea Bromine and Dead Sea Magnesium (hereinafter - the Subsidiaries) was valuatedmeasured in their statutory reports based on the Replacement Cost Methodology.Methodology under IFRS. This evaluation was performed mainly forin recent years and serve, among others, as the Subsidiaries’ financial statements of 2016 and onward, which serve as a basis for the mineral based financial reports filedprepared pursuant to the provisions of the Taxation of Natural Resources Law. For further information, see Note 20.15.
ICL Group LimitedConsolidated Financial Statements30
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 5 - Operating Segments
A. General
1. Information on operating segments:
ICL is a global specialty minerals and chemicals company operating bromine, potash and phosphate mineral value chains in a unique, integrated business model. To align with ICL's strategy of enhancing market leadership across its three core-mineral value chains of bromine, potash and phosphate, as well as realizing the growth potential of Innovative Ag Solutions, commencing August 31, 2018, the Company operates viaOur operations are organized under four segments: Industrial Products, Potash, Phosphate Solutions and Innovative Agriculture Solutions.
As part of management’s strategy to strengthen the focus on its specialties products a decision was made regarding the Company’s managerial structure, according to which, as of January 2022, the activities of ICL Boulby and ICL Amfert will be allocated from the potash and phosphate solutions segments, respectively, to the Innovative Ag Solutions. The comparative data has been restated to reflect the changeSolutions segment. This transition is not reflected in the structure of the reportable segments, as stated above.
presentation set forth below.Industrial Products – The Industrial Products segment produces bromine out of a solution that is a by‑product of the potash production process in Sodom, Israel, as well as bromine‑based compounds. Industrial Products segment uses most of the bromine it produces for self‑production of bromine compounds at its production sites in Israel, the Netherlands and China. Industrial Products is also engaged in the production and marketing of phosphorous-based products. In addition, the Industrial Products segment produces several grades of potash, salt, magnesium chloride and magnesia products. The segment is also engaged in the production and marketing of phosphorous-based flame retardants and additional phosphorus‑based products.
Potash – The PotashPotash segment usesproduces and sells mainly potash, salt, Polysulphate®, magnesium and electricity. Potash is produced in Israel and Spain, using an evaporation process to extract potash from the Dead Sea in Israel and uses conventional mining to produce potash and salt from an underground mine in Spain. The segment marketsIn its potash fertilizers globally and also carries on certain other operations not solely related to the potash activities. At the end of the second quarter of 2018, the Company ceased the production of potash in the ICL Boulby mine in the UK, the Company produces Polysulphate®, which is composed of sulphur, potash, calcium and shifted to sole production of Polysulphate™.magnesium. The Polysulphate™ is produced in an underground mine at ICL Boulby in the UK, and is the basis for a significant part of the Company'sCompany’s FertilizerpluS product line is based mainly on Polysulphate®. The segment also includes a magnesium activities underproduct line which it produces markets and sells pure magnesium and magnesium alloys, and also produces related by-products, includingas well as chlorine and sylvinite. In addition, the Potash segment sells salt that is produced in its potash and Polysulphate® underground mines in Spain and the UK. The Company has a power plant in Sodom, which supplies electricity to ICL companies in Israel (electricity surplus is sold to external customers) and steam to all facilities in the Sodom site.
Phosphate Solutions – The Phosphate Solutions segment is based on a phosphate value chain which uses phosphate commodity products, such as phosphate rock and fertilizer-grade phosphoric acid (“green phosphoric acid”), to produce specialty products with higher added value. The segment also produces and markets phosphate-based fertilizers.
Phosphate rock is mined and processed from open pit mines, threetwo of which are located in the Negev Desert in Israel, while the fourththird is locatedsituated in Yunnan province in China. Sulphuric acid, green phosphoric acid and phosphate fertilizers are produced in facilities in Israel, China and Europe.
ICL Group LimitedConsolidated Financial Statements31
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 5 - Operating Segments (cont'd)
A. General (cont'd)
1. Information on operating segments: (cont'd)
The Phosphate Solutions segment purifies some of itsmanufactures purified phosphoric acid by purifying green phosphoric acid. Pure phosphoric acid and green phosphoric acid and manufactures thermal phosphoric acidare used to provide solutions based on specialtymanufacture downstream products with high added value, such as phosphate salts and acids, for diversifieda wide range of food and industrial applications. Phosphate salts and acids are used in various industrial end markets, such as oral care, cleaning products, paints and coatings, LFP batteries, water treatment, asphalt modification, construction, metal treatment, and metal treatment.more. The specialty phosphate salts and acids are mainly produced insegment’s products for the Company’s facilities in US, Brazil, Germany and China. The segment is also a leader in developing and producingfood industry include functional food ingredients and phosphate additives, which provide texture and stability solutions for the processed meat, meat alternatives, poultry, seafood, dairy, beveragebeverages and baked goods markets.goods. In addition, the segment supplies purepurified phosphoric acid to ICL’s specialty fertilizers business and produces alternative protein meat substitutes, as well as milk and whey proteins for the food ingredients industry.
Innovative Ag Solutions –
The Innovative Ag Solutions segmentIn January 2021, the Company completed the acquisition of Fertiláqua, one of Brazil’s leading specialty plant nutrition companies, and in July 2021, the acquisition of the South American Plant Nutrition business of Compass Minerals América do Sul S.A. (hereinafter - ADS).
ICL is continuously working to expand its broad product portfolio of specialty plant nutrition, plant stimulation and plant health solutions, which consists of enhanced efficiency and controlled release fertilizers (CRF), water soluble fertilizers (WSF), liquid fertilizers slow release fertilizers (SRF) and straights (MKP/MAP/Pekacid).
PeKacid), soil and foliar micronutrients, secondary nutrients, biostimulants, soil conditioners, seed treatment products, and adjuvants.
The Innovative Ag Solutions segment develops, manufactures, markets and sells fertilizers that are based primarily on nitrogen, potash (potassium chloride)its products globally, mainly in Brazil, Europe, Asia, North America and phosphate.Israel. It produces water soluble specialty fertilizers in Belgium, Israel and the US,Spain, liquid fertilizers in Israel, Spain, China and Brazil, straights soluble fertilizers in IsraelChina and Spain, andIsrael, controlled‑release fertilizers in the Netherlands, Brazil and the United States. ICL's specialty fertilizers business markets its products worldwide, mainlyStates, as well as secondary nutrients, biostimulants, soil conditioners, seed treatment product, and adjuvants in Europe, Asia, North America and Israel.Brazil.
Other Activities – Business activities which include, among other, ICL’s innovative arm, which will seek to focus on R&D,promoting innovation, developing new products and services, as well as implementing digital innovation.
ICL Group LimitedConsolidated Financial Statements32
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 5 - Operating Segments (cont’d)(cont'd)
| A. | General (cont'd) |
2. Segment capital investments
The capital investments made by the segments, for each of the reporting years,periods, include mainly property, plant and equipment, andas well as intangible assets acquired in the ordinary course of business and as part of business combinations.
3. Inter–segment transfers and unallocated income (expenses)
The segmentSegment profit is measured based on the operating income, without the allocation of certain expenses that are not allocated to the operating segments, including general and administrative expenses, as it is includedpresented in the reports that are regularly reviewed by the chief operating decision maker.
Chief Operating Decision Maker. This is the basis for analyzing segment results, since management believes that it is the most relevant measure for the assessment of such results.
| For the year ended December 31, 2018 | |||||||
| Sales to external parties | 1,281 | 1,481 | 2,001 | 719 | 74 | - | 5,556 |
| Inter-segment sales | 15 | 142 | 98 | 22 | 5 | (282) | - |
| Total sales | 1,296 | 1,623 | 2,099 | 741 | 79 | (282) | 5,556 |
| Segment profit | 350 | 393 | 208 | 57 | 9 | (7) | 1,010 |
| General and administrative expenses | (257) | ||||||
| Other income not allocated to the segments | 766 | ||||||
| Operating income | 1,519 | ||||||
| Financing expenses, net | (158) | ||||||
| Share in earnings of equity-accounted investee | 3 | ||||||
| Income before income taxes | 1,364 | ||||||
| Capital expenditures | 50 | 356 | 180 | 15 | 1 | 3 | 605 |
| Depreciation, amortization and impairment | 63 | 141 | 172 | 19 | 4 | 21 | 420 |
| For the year ended December 31, 2017 | |||||||
| Sales to external parties | 1,179 | 1,258 | 1,938 | 671 | 372 | - | 5,418 |
| Inter-segment sales | 14 | 125 | 99 | 21 | 12 | (271) | - |
| Total sales | 1,193 | 1,383 | 2,037 | 692 | 384 | (271) | 5,418 |
| Segment profit | 303 | 282 | 149 | 56 | 127 | (4) | 913 |
| General and administrative expenses | (261) | ||||||
| Other expenses not allocated to the segments | (23) | ||||||
| Operating income | 629 | ||||||
| Financing expenses, net | (124) | ||||||
| Income before income taxes | 505 | ||||||
| Capital expenditures | 49 | 270 | 154 | 12 | 19 | 3 | 507 |
| Depreciation, amortization and impairment | 61 | 128 | 172 | 19 | 8 | 30 | 418 |
| For the year ended December 31, 2016 | |||||||
| Sales to external parties | 1,111 | 1,213 | 2,082 | 632 | 325 | - | 5,363 |
| Inter-segment sales | 9 | 125 | 104 | 29 | 15 | (282) | - |
| Total sales | 1,120 | 1,338 | 2,186 | 661 | 340 | (282) | 5,363 |
| Segment profit | 286 | 282 | 224 | 55 | 93 | (37) | 903 |
| General and administrative expenses | (321) | ||||||
| Other expenses not allocated to the segments | (585) | ||||||
| Operating loss | (3) | ||||||
| Financing expenses, net | (132) | ||||||
| Share in earnings of equity-accounted investees | 18 | ||||||
| Loss before income taxes | (117) | ||||||
| Capital expenditures | 38 | 311 | 237 | 7 | 1 | 58 | 652 |
| Depreciation, amortization and impairment | 52 | 127 | 203 | 17 | 3 | 4 | 406 |
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 5 - Operating Segments (cont'd)
Industrial Products | Potash | Phosphate Solutions | Innovative Ag Solutions | Other Activities | Reconciliations | Consolidated | |
$ millions | |||||||
| 2018 | 2017 | 2016 | ||||
$ millions | % of sales | $ millions | % of sales | $ millions | % of sales | |
| USA | 903 | 16 | 1,091 | 20 | 1,070 | 20 |
| China | 848 | 15 | 724 | 13 | 669 | 12 |
| Brazil | 656 | 12 | 594 | 11 | 521 | 10 |
| United Kingdom | 382 | 7 | 328 | 6 | 306 | 6 |
| Germany | 365 | 7 | 378 | 7 | 392 | 7 |
| France | 267 | 5 | 265 | 5 | 226 | 4 |
| Spain | 262 | 5 | 264 | 5 | 258 | 5 |
| Israel | 223 | 4 | 171 | 3 | 237 | 4 |
| India | 211 | 4 | 200 | 4 | 199 | 4 |
| Australia | 126 | 2 | 85 | 2 | 187 | 3 |
| All other | 1,313 | 23 | 1,318 | 24 | 1,298 | 25 |
| Total | 5,556 | 100 | 5,418 | 100 | 5,363 | 100 |
For the year ended December 31, 2021 | |||||||
Sales to external parties | 1,601 | 1,768 | 2,334 | 1,226 | 26 | 0 | 6,955 |
Inter-segment sales | 16 | 163 | 98 | 19 | 2 | (298) | 0 |
Total sales | 1,617 | 1,931 | 2,432 | 1,245 | 28 | (298) | 6,955 |
Segment operating income (loss) | 435 | 399 | 307 | 121 | (8) | (60) | 1,194 |
Other income not allocated to the segments | 16 | ||||||
Operating income | 1,210 | ||||||
Financing expenses, net | (122) | ||||||
Share in earnings of equity-accounted investees | 4 | ||||||
Income before income taxes | 1,092 | ||||||
Depreciation amortization and impairment | 65 | 165 | 215 | 38 | 2 | (1) | 484 |
Capital expenditures | 74 | 298 | 238 | 36 | 6 | 17 | 669 |
Capital expenditures as part of business combination | 0 | 0 | 0 | 377 | 0 | 0 | 377 |
ICL Group LimitedConsolidated Financial Statements34
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 5 - Operating Segments (cont'd)
B. Operating segment data (cont'd)
Industrial Products | Potash | Phosphate Solutions | Innovative Ag Solutions | Other Activities | Reconciliations | Consolidated | |
$ millions | |||||||
For the year ended December 31, 2020 | |||||||
Sales to external parties | 1,242 | 1,183 | 1,871 | 715 | 32 | 0 | 5,043 |
Inter-segment sales | 13 | 163 | 77 | 16 | 3 | (272) | 0 |
Total sales | 1,255 | 1,346 | 1,948 | 731 | 35 | (272) | 5,043 |
Segment operating income (loss) | 303 | 120 | 66 | 40 | (5) | (15) | 509 |
Other expenses not allocated to the segments | (307) | ||||||
Operating income | 202 | ||||||
Financing expenses, net | (158) | ||||||
Share in earnings of equity-accounted investees | 5 | ||||||
Income before income taxes | 49 | ||||||
Depreciation amortization and impairment | 77 | 166 | 210 | 25 | 3 | 98 | 579 |
Capital expenditures | 84 | 296 | 275 | 20 | 6 | 15 | 696 |
Capital expenditures as part of business combination | 0 | 0 | 0 | 0 | 26 | 0 | 26 |
ICL Group LimitedConsolidated Financial Statements35
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 5 - Operating Segments (cont'd)
B. Operating segment data (cont'd)
Industrial Products | Potash | Phosphate Solutions | Innovative Ag Solutions | Other Activities | Reconciliations | Consolidated | |
$ millions | |||||||
For the year ended December 31, 2019 | |||||||
Sales to external parties | 1,307 | 1,330 | 1,901 | 699 | 34 | 0 | 5,271 |
Inter-segment sales | 11 | 164 | 79 | 18 | 3 | (275) | 0 |
Total sales | 1,318 | 1,494 | 1,980 | 717 | 37 | (275) | 5,271 |
Segment operating income | 338 | 289 | 100 | 21 | 19 | (7) | 760 |
Other expenses not allocated to the segments | (4) | ||||||
Operating income | 756 | ||||||
Financing expenses, net | (129) | ||||||
Share in earnings of equity-accounted investees | 1 | ||||||
Income before income taxes | 628 | ||||||
Depreciation amortization and impairment | 67 | 149 | 177 | 21 | 22 | (3) | 433 |
Implementation of IFRS 16 | 8 | 95 | 113 | 9 | 105 | 9 | 339 |
Capital expenditures | 66 | 383 | 213 | 21 | 4 | 6 | 693 |
ICL Group LimitedConsolidated Financial Statements36
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 5 - Operating Segments (cont'd)
C. Information based on geographical location (cont'd)
The following table presents the distribution of ICL’s sales by geographical location of the customer:
2021 | 2020 | 2019 | ||||
$ millions | % of sales | $ millions | % of sales | $ millions | % of sales | |
Brazil | 1,178 | 17 | 447 | 9 | 581 | 11 |
USA | 1,091 | 16 | 793 | 16 | 840 | 16 |
China | 1,060 | 15 | 806 | 16 | 802 | 15 |
United Kingdom | 386 | 6 | 336 | 7 | 347 | 7 |
Germany | 345 | 5 | 327 | 6 | 334 | 6 |
Israel | 291 | 4 | 260 | 5 | 241 | 5 |
Spain | 280 | 4 | 243 | 5 | 249 | 5 |
France | 270 | 4 | 238 | 5 | 257 | 5 |
India | 213 | 3 | 194 | 4 | 178 | 3 |
Italy | 145 | 2 | 114 | 2 | 116 | 2 |
All other | 1,696 | 24 | 1,285 | 25 | 1,326 | 25 |
Total | 6,955 | 100 | 5,043 | 100 | 5,271 | 100 |
ICL Group LimitedConsolidated Financial Statements37
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 5 - Operating Segments (cont'd)
| C. | Information based on geographical location (cont'd) |
The following table presents the distribution of the operating segments sales by geographical location of the customer:
Industrial Products | Potash | Phosphate Solutions | Innovative Ag Solutions | Other Activities | Reconciliations | Consolidated | |
$ millions | |||||||
For the year ended December 31, 2021 | |||||||
Europe | 530 | 497 | 765 | 424 | 23 | (80) | 2,159 |
Asia | 597 | 513 | 621 | 156 | 1 | (12) | 1,876 |
South America | 64 | 507 | 359 | 378 | 0 | (3) | 1,305 |
North America | 363 | 216 | 492 | 120 | 1 | (6) | 1,186 |
Rest of the world | 63 | 198 | 195 | 167 | 3 | (197) | 429 |
Total | 1,617 | 1,931 | 2,432 | 1,245 | 28 | (298) | 6,955 |
| For the year ended December 31, 2018 | |||||||
| Europe | 473 | 459 | 719 | 362 | 49 | (92) | 1,970 |
| Asia | 399 | 519 | 481 | 105 | 2 | (18) | 1,488 |
| North America | 347 | 107 | 405 | 103 | 24 | (8) | 978 |
| South America | 21 | 408 | 264 | 21 | 1 | (3) | 712 |
| Rest of the world | 56 | 130 | 230 | 150 | 3 | (161) | 408 |
| Total | 1,296 | 1,623 | 2,099 | 741 | 79 | (282) | 5,556 |
Industrial Products | Potash | Phosphate Solutions | Innovative Ag Solutions | Other Activities | Reconciliations | Consolidated | |
$ millions | |||||||
For the year ended December 31, 2020 | |||||||
Europe | 458 | 411 | 665 | 334 | 30 | (76) | 1,822 |
Asia | 405 | 433 | 480 | 127 | 1 | (14) | 1,432 |
South America | 40 | 230 | 227 | 21 | 0 | (1) | 517 |
North America | 299 | 86 | 372 | 105 | 2 | (5) | 859 |
Rest of the world | 53 | 186 | 204 | 144 | 2 | (176) | 413 |
Total | 1,255 | 1,346 | 1,948 | 731 | 35 | (272) | 5,043 |
| For the year ended December 31, 2017 | |||||||
| Europe | 456 | 386 | 749 | 326 | 87 | (86) | 1,918 |
| Asia | 351 | 433 | 476 | 100 | 3 | (21) | 1,342 |
| North America | 327 | 116 | 369 | 94 | 282 | (13) | 1,175 |
| South America | 19 | 347 | 277 | 22 | 5 | (4) | 666 |
| Rest of the world | 40 | 101 | 166 | 150 | 7 | (147) | 317 |
| Total | 1,193 | 1,383 | 2,037 | 692 | 384 | (271) | 5,418 |
ICL Group LimitedConsolidated Financial Statements38
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 5 - Operating Segments (cont'd)
| C. | Information based on geographical location (cont'd) |
The following table presents the distribution of the operating segments sales by geographical location of the customer: (cont'd)
Industrial Products | Potash | Phosphate Solutions | Innovative Ag Solutions | Other Activities | Reconciliations | Consolidated | |
$ millions | |||||||
| For the year ended December 31, 2016 | |||||||
| Europe | 424 | 421 | 717 | 319 | 77 | (95) | 1,863 |
| Asia | 301 | 396 | 511 | 74 | 6 | (13) | 1,275 |
| North America | 330 | 93 | 380 | 110 | 250 | (22) | 1,141 |
| South America | 25 | 267 | 274 | 19 | 1 | 2 | 588 |
| Rest of the world | 40 | 161 | 304 | 139 | 6 | (154) | 496 |
| Total | 1,120 | 1,338 | 2,186 | 661 | 340 | (282) | 5,363 |
For the year ended December 31, 2019 | |||||||
Europe | 469 | 422 | 712 | 336 | 31 | (85) | 1,885 |
Asia | 399 | 470 | 447 | 118 | 1 | (12) | 1,423 |
South America | 56 | 327 | 263 | 23 | 0 | (1) | 668 |
North America | 353 | 95 | 370 | 95 | 0 | (3) | 910 |
Rest of the world | 41 | 180 | 188 | 145 | 5 | (174) | 385 |
Total | 1,318 | 1,494 | 1,980 | 717 | 37 | (275) | 5,271 |
ICL Group LimitedConsolidated Financial Statements39
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 5 - Operating Segments (cont'd)
| C. | Information based on geographical location (cont'd) |
The following table presents the distribution of ICL'sthe Company’s sales by geographical location of the assets:main facilities from which they were produced.
| For the year ended December 31 | |||
| 2018 | 2017 | 2016 | |
| $ millions | $ millions | $ millions | |
For the year ended December 31 | |||
2021 | 2020 | 2019 | |
$ millions | $ millions | $ millions | |
Israel | 3,526 | 2,636 | 2,815 |
Europe | 2,437 | 2,014 | 2,079 |
South America | 1,095 | 424 | 441 |
North America | 897 | 757 | 816 |
Asia | 861 | 643 | 615 |
Others | 56 | 48 | 47 |
8,872 | 6,522 | 6,813 | |
Intercompany sales | (1,917) | (1,479) | (1,542) |
Total | 6,955 | 5,043 | 5,271 |
| Israel | 2,841 | 2,548 | 2,470 |
| Europe | 2,198 | 2,119 | 2,124 |
| North America | 831 | 1,045 | 1,045 |
| Asia | 617 | 583 | 556 |
| Others | 211 | 215 | 218 |
| 6,698 | 6,510 | 6,413 | |
| Intercompany sales | (1,142) | (1,092) | (1,050) |
| Total | 5,556 | 5,418 | 5,363 |
The following table presents operating income (loss) by geographical location of the assets from which it was produced:
| For the year ended December 31 | |||
| 2018 | 2017 | 2016 | |
| $ millions | $ millions | $ millions | |
For the year ended December 31 | |||
2021 | 2020 | 2019 | |
$ millions | $ millions | $ millions | |
Israel* | 863 | 105 | 578 |
Asia | 179 | 64 | 59 |
South America** | 95 | 35 | 19 |
North America | 71 | 47 | 61 |
Europe | 7 | (50) | 32 |
Others | 4 | 4 | 3 |
Intercompany eliminations | (9) | (3) | 4 |
Total | 1,210 | 202 | 756 |
| Europe* | 834 | (45) | (117) |
| Israel | 526 | 475 | 304 |
| North America | 74 | 154 | 83 |
| Asia | 52 | 8 | (41) |
| Others | 29 | 33 | (203) |
| Intercompany eliminations | 4 | 4 | (29) |
| Total | 1,519 | 629 | (3) |
| * | Israel operating income for 2020 includes a loss of $274 million resulting from impairments and the initiation of efficiency initiatives and measures. |
** Europe profitSouth America operating income for 2021 includes $51 million resulting from the year ended December 31, 2018 includes gain from divestitureoperations of businesses inFertilaqua and ADS, which were acquired during the amount of $841 million.year. For furtheradditional information see Note 10.8B.
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 5 - Operating Segments (cont'd)
C. Information based on geographical location (cont'd)
The following table present the non-current assets by geographical location of the assets (*)
As of December 31 | ||
2021 | 2020 | |
$ millions | $ millions | |
Israel | 4,079 | 3,952 |
Europe | 1,505 | 1,575 |
Asia | 483 | 490 |
| South America | 391 | 58 |
North America | 333 | 319 |
Other | 5 | 5 |
Total | 6,796 | 6,399 |
| (*) | Mainly consist of property, plant and equipment, intangible assets and non-current inventories. |
| For the year ended December 31 | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
As of December 31 | ||
2021 | 2020 | |
$ millions | $ millions | |
| Israel | 3,570 | 3,387 |
| Europe | 1,228 | 1,227 |
| Asia | 401 | 455 |
| North America | 309 | 321 |
| Other | 59 | 94 |
| Total | 5,567 | 5,484 |
Finished products | 946 | 807 |
Work in progress | 299 | 263 |
Raw materials | 349 | 207 |
Spare parts | 125 | 125 |
Total inventories | 1,719 | 1,402 |
Of which: | ||
Non-current inventories - mainly raw materials (presented in non-current assets) | 149 | 152 |
Current inventories | 1,570 | 1,250 |
Note 7 - Prepaid expenses and equipment and intangible assets, non-current inventories and lease rights.other receivables
As of December 31 | ||
2021 | 2020 | |
$ millions | $ millions | |
Government institutions | 97 | 72 |
Current tax assets | 97 | 65 |
Prepaid expenses | 51 | 50 |
Derivative instruments | 48 | 24 |
Financial asset at amortized cost | 0 | 66 |
Other | 64 | 64 |
357 | 341 |
ICL Group LimitedConsolidated Financial Statements41
Notes to the Consolidated Financial Statements as atof December 31, 20182021
| As at December 31 | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
| Finished products | 772 | 709 |
| Work in progress | 258 | 269 |
| Raw materials | 216 | 212 |
| Spare parts | 143 | 142 |
| Total inventories | 1,389 | 1,332 |
| Less – non-current inventories. mainly raw materials (presented in non-current assets) | 99 | 106 |
| Current inventories | 1,290 | 1,226 |
| As at December 31 | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
| Government institutions | 108 | 78 |
| Current tax assets | 79 | 16 |
| Prepaid expenses | 52 | 43 |
| Insurance receivables | 1 | 26 |
| Other | 55 | 62 |
| 295 | 225 |
| A. | Non-controlling interests in subsidiaries |
The following tables present information with respect to non-controlling interests in a Group subsidiary, YPH JV (at the rate of 50%), before elimination of inter-company transactions. The information includes fair value adjustments that were made on the acquisition date, other than goodwill and presented without adjustments for the ownership rates held by the Group.Company.
| 2018 | 2017 | |
| $ millions | $ millions |
As of December 31 | ||
2021 | 2020 | |
$ millions | $ millions | |
Current assets | 231 | 149 |
Non-current assets | 408 | 400 |
Current liabilities | (168) | (189) |
Non-current liabilities | (83) | (76) |
Equity | (388) | (284) |
| Current assets | 192 | 197 |
| Non-current assets | 318 | 367 |
| Current liabilities | 225 | 241 |
| Non-current liabilities | 49 | 215 |
| Equity | 236 | 108 |
For the year ended December 31 | |||
2021 | 2020 | 2019 | |
$ millions | $ millions | $ millions | |
Sales | 528 | 359 | 349 |
Operating Income | 105 | 29 | 23 |
Depreciation and amortization | 38 | 37 | 41 |
Operating income before depreciation and amortization | 143 | 66 | 64 |
Net Income | 96 | 23 | 11 |
Total Comprehensive income | 104 | 40 | 8 |
| B. | Business Acquisition and Divestiture |
| 2018 | 2017 | 2016 | |
| $ millions | $ millions | $ millions |
| (1) | As part of the Company's strategy to expand the specialty fertilizers business and focus on growing markets, such as achieving leadership positions in Brazil, a high growth specialty plant nutrition market, in January 2021, the Company completed the acquisition of Agro Fertiláqua Participações S.A., one of Brazil's leading specialty plant nutrition companies, for a consideration of $131 million, including net debt of $43 million. |
In July 2021, the Company completed the acquisition of the South American plant nutrition business of ADS, for a total consideration of about $443 million, including net debt of about $104 million. ADS offers a broad range of solutions for plant nutrition and stimulation, soil treatment, seed treatment and plant health, covering all key Brazilian crops, and as such significantly expands ICL's product portfolio and segment profitability, while providing seasonal balance between the Northern and Southern hemispheres.
| Sales | 387 | 363 | 377 |
| Operating loss | - | (21) | (78) |
| Depreciation and amortization | 34 | 34 | 34 |
| Operating income (loss) before depreciation and amortization | 34 | 13 | (44) |
| Net loss | (13) | (38) | (104) |
| Comprehensive income (loss) | 3 | (26) | (126) |
ICL Group LimitedConsolidated Financial Statements42
| As at December 31 | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
| Lease rights | 102 | 106 |
| Non-current inventories | 99 | 106 |
| Surplus in defined benefit plan | 73 | 89 |
| Long-term loan | 59 | - |
| Derivatives | 15 | 64 |
| Other | 9 | 8 |
| 357 | 373 |
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 108 - Business DivestitureInvestments in Subsidiaries (cont'd)
As of December 31 | ||
2021 | 2020 | |
$ millions | $ millions | |
Non-current inventories | 149 | 152 |
Surplus in employees' defined benefit plans (1) | 115 | 91 |
Derivative designated as a cash flow hedge | 97 | 115 |
Investments in equity-accounted investees | 26 | 27 |
Other | 16 | 8 |
403 | 393 |
| (1) | See Note 16. |
ICL Group LimitedConsolidated Financial Statements43
Notes to the Consolidated Financial Statements as atof December 31, 2018
2021
Note 1110 - Property, Plant and Equipment
A. Composition
Land | Technical equipment and | Dikes and evaporating ponds | Plants under construction (1) | Other | Right of use asset | Total | |||||||
$ millions | |||||||||||||
| Cost | ||||||||||||||
| Balance as at January 1, 2018 | 844 | 5,788 | 1,888 | 150 | 242 | 898 | 9,810 | |||||||
Balance as of January 1, 2021 | 880 | 7,419 | 1,441 | 778 | 1,003 | 496 | 12,017 | |||||||
Additions in respect of business combinations | 85 | 20 | 0 | 9 | 2 | 9 | 125 | |||||||
| Additions | 42 | 789 | 100 | 5 | 20 | (367) | 589 | 193 | 382 | 51 | (99) | 78 | 37 | 642 |
| Disposals | (2) | (19) | - | (2) | (7) | - | (30) | (2) | (44) | (1) | 0 | (6) | (20) | (73) |
Exit from consolidation | (9) | (21) | 0 | (1) | (2) | (33) | ||||||||
| Translation differences | (23) | (76) | (13) | - | (4) | (16) | (132) | (40) | (92) | (26) | (24) | (3) | (2) | (187) |
| Balance as at December 31, 2018 | 861 | 6,482 | 1,975 | 153 | 251 | 515 | 10,237 | |||||||
Balance as of December 31, 2021 | 1,107 | 7,664 | 1,465 | 664 | 1,073 | 518 | 12,491 | |||||||
| Accumulated depreciation | ||||||||||||||
| Balance as at January 1, 2018 | 451 | 3,520 | 1,053 | 84 | 181 | - | 5,289 | |||||||
| Depreciation for the year | 24 | 234 | 96 | 7 | 12 | - | 373 | |||||||
| Impairment | 5 | - | 1 | - | 11 | |||||||||
Balance as of January 1, 2021 | 491 | 4,300 | 763 | 0 | 817 | 96 | 6,467 | |||||||
Depreciation | 30 | 227 | 55 | 0 | 71 | 454 | ||||||||
Reversal of impairment | 0 | (6) | 0 | (6) | ||||||||||
| Disposals | (1) | (16) | - | (2) | (8) | - | (27) | (5) | (34) | 0 | (4) | (19) | (62) | |
Exit from consolidation | (3) | (19) | 0 | (22) | ||||||||||
| Translation differences | (11) | (50) | (10) | - | (1) | - | (72) | (11) | (58) | (21) | 0 | (3) | (1) | (94) |
| Balance as at December 31, 2018 | 468 | 3,693 | 1,139 | 89 | 185 | - | 5,574 | |||||||
| Depreciated balance as at December 31, 2018 | 393 | 2,789 | 836 | 64 | 66 | 515 | 4,663 | |||||||
Balance as of December 31, 2021 | 502 | 4,410 | 797 | 0 | 881 | 147 | 6,737 | |||||||
Depreciated balance as of December 31, 2021 | 605 | 3,254 | 668 | 664 | 192 | 371 | 5,754 | |||||||
(1) The additions for the year are presented net of items thefor which construction of which werehas been completed and accordingly were recorded inreclassified to other categories in the “property, plant and equipment” section.
ICL Group LimitedConsolidated Financial Statements44
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 1110 - Property, Plant and Equipment (cont’d)(cont'd)
A. Composition (cont'd)
Land | Technical equipment and | Dikes and evaporating ponds | Plants under construction (1) | Other | Right of use asset | Total | |||||||
$ millions | |||||||||||||
| Cost | ||||||||||||||
| Balance as at January 1, 2017 | 763 | 5,408 | 1,715 | 149 | 244 | 879 | 9,158 | |||||||
Balance as of January 1, 2020 | 804 | 6,865 | 1,392 | 765 | 945 | 423 | 11,194 | |||||||
| Additions | 42 | 302 | 140 | 7 | 13 | (14) | 490 | 63 | 467 | 21 | (24) | 68 | 80 | 675 |
| Disposals | (6) | (28) | - | (12) | (17) | - | (63) | (7) | (34) | 0 | (7) | (21) | (69) | |
Exit from consolidation | (14) | (5) | 0 | (6) | (1) | (26) | ||||||||
| Translation differences | 49 | 136 | 33 | 7 | 9 | 35 | 269 | 34 | 126 | 28 | 37 | 3 | 15 | 243 |
| Reclassification to assets held for sale | (4) | (30) | - | (1) | (7) | (2) | (44) | |||||||
| Balance as at December 31, 2017 | 844 | 5,788 | 1,888 | 150 | 242 | 898 | 9,810 | |||||||
Balance as of December 31, 2020 | 880 | 7,419 | 1,441 | 778 | 1,003 | 496 | 12,017 | |||||||
| Accumulated depreciation | ||||||||||||||
| Balance as at January 1, 2017 | 409 | 3,232 | 944 | 83 | 181 | - | 4,849 | |||||||
| Depreciation for the year | 23 | 227 | 84 | 7 | 14 | - | 355 | |||||||
Balance as of January 1, 2020 | 445 | 3,950 | 666 | 0 | 760 | 42 | 5,863 | |||||||
Depreciation | 35 | 246 | 47 | 0 | 66 | 67 | 461 | |||||||
Disposals | (6) | (31) | 0 | (7) | (15) | (59) | ||||||||
| Impairment | - | 13 | - | - | - | - | 13 | 0 | 58 | 27 | 0 | 85 | ||
| Disposals | (4) | (23) | - | (12) | (17) | - | (56) | |||||||
Exit from consolidation | (2) | (4) | 0 | (4) | 0 | (10) | ||||||||
| Translation differences | 24 | 85 | 25 | 7 | 6 | - | 147 | 19 | 81 | 23 | 0 | 2 | 127 | |
| Reclassification to assets held for sale | (1) | (14) | - | (1) | (3) | - | (19) | |||||||
| Balance as at December 31, 2017 | 451 | 3,520 | 1,053 | 84 | 181 | - | 5,289 | |||||||
| Depreciated balance as at December 31, 2017 | 393 | 2,268 | 835 | 66 | 61 | 898 | 4,521 | |||||||
Balance as of December 31, 2020 | 491 | 4,300 | 763 | 0 | 817 | 96 | 6,467 | |||||||
Depreciated balance as of December 31, 2020 | 389 | 3,119 | 678 | 778 | 186 | 400 | 5,550 | |||||||
(1) The additions for the year are presented net of items thefor which construction of which werehas been completed and accordingly were recorded inreclassified to other categories in the “property, plant and equipment” section.
ICL Group LimitedConsolidated Financial Statements45
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 10 - Property, Plant and Equipment (cont'd)
B. Additional information
(1)In accordance with the Company’s policy regarding the periodic examination of the estimated useful life of Property, Plant and Equipment, in 2021, the Company conducted an examination of the estimated remaining useful life of Property, Plant and Equipment at its facilities in Israel, which was based on the Company’s experience, level of maintenance and operation of the facilities over the years. According to the examination, it was found that following the increase in maintenance activity and the implementation of operational excellence processes, the life expectancy of certain Property, Plant and Equipment is higher than their previously estimated remaining useful life. Based on the assessment, the estimated useful life of the said assets was extended by 5-10 years, as of January 2021. The impact of this update is a reduction in depreciation expenses, of $51 million in earnings and a balance of $18 million as a change in inventory value.
(2) In December 2021, the Company entered into an agreement with a third party for the sale of an asset located in the industrial area of Ashdod, Israel, for a consideration of about $16.5 million. As a result, the Company recognized a capital gain of $16 million as "other income" in its Statement of Income.
| Cost | |||||||||
| Balance as at January 1, 2018 | 348 | 216 | 91 | 80 | 183 | 39 | 76 | 34 | 1,067 |
| Additions | - | - | - | 1 | - | 1 | 13 | 1 | 16 |
| Disposals | - | - | - | - | - | - | - | (2) | (2) |
| Translation differences | (17) | (6) | (3) | (6) | (5) | (1) | (2) | - | (40) |
| Balance as at December 31, 2018 | 331 | 210 | 88 | 75 | 178 | 39 | 87 | 33 | 1,041 |
| Amortization and impairment losses | |||||||||
| Balance as at January 1, 2018 | 22 | 63 | 24 | 35 | 94 | 25 | 61 | 21 | 345 |
| Amortization for the year | - | 5 | 3 | 5 | 10 | 1 | 4 | 2 | 30 |
| Impairment | - | - | - | 3 | 3 | - | - | - | 6 |
| Disposals | - | - | - | - | - | - | - | (1) | (1) |
| Translation differences | - | - | (1) | (4) | (2) | (1) | (2) | - | (10) |
| Balance as at December 31, 2018 | 22 | 68 | 26 | 39 | 105 | 25 | 63 | 22 | 370 |
| Amortized Balance as at December 31 ,2018 | 309 | 142 | 62 | 36 | 73 | 14 | 24 | 11 | 671 |
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 1211 - Intangible Assets (cont'd)
Composition |
Goodwill | Concessions and mining rights | Technology / patents | Customer relationships | Computer application | Others | Total | ||||||||||
$ millions | ||||||||||||||||
Cost | ||||||||
Balance as of January 1, 2021 | 341 | 218 | 92 | 93 | 172 | 118 | 73 | 1,107 |
Additions in respect of business combinations | 210 | 0 | 1 | 2 | 39 | 0 | 0 | 252 |
| Additions | 0 | 0 | 0 | 6 | 1 | 19 | 1 | 27 |
Translation differences | (29) | (3) | (5) | (4) | (9) | (13) | (4) | (67) |
Balance as of December 31, 2021 | 522 | 215 | 88 | 97 | 203 | 124 | 70 | 1,319 |
Amortization | ||||||||
Balance as of January 1, 2021 | 21 | 74 | 34 | 55 | 123 | 76 | 54 | 437 |
Amortization for the year | 0 | 6 | 3 | 5 | 12 | 7 | 3 | 36 |
Translation differences | (1) | 0 | (3) | (2) | (4) | (9) | (2) | (21) |
Balance as of December 31, 2021 | 20 | 80 | 34 | 58 | 131 | 74 | 55 | 452 |
Amortized Balance as of December 31 ,2021 | 502 | 135 | 54 | 39 | 72 | 50 | 15 | 867 |
| Cost | |||||||||
| Balance as at January 1, 2017 | 398 | 205 | 86 | 80 | 214 | 35 | 65 | 76 | 1,159 |
| Additions | - | - | - | 3 | - | 1 | 10 | 3 | 17 |
| Discontinuance of consolidation | (55) | - | - | - | - | - | - | - | (55) |
| Translation differences | 16 | 11 | 7 | 7 | 16 | 3 | 2 | 1 | 63 |
| Reclassification to assets held for sale | (11) | - | (2) | (10) | (47) | - | (1) | (46) | (117) |
| Balance as at December 31, 2017 | 348 | 216 | 91 | 80 | 183 | 39 | 76 | 34 | 1,067 |
| Amortization and impairment losses | |||||||||
| Balance as at January 1, 2017 | 21 | 57 | 19 | 34 | 88 | 9 | 57 | 50 | 335 |
| Amortization for the year | - | 6 | 3 | 5 | 12 | 1 | 3 | 5 | 35 |
| Impairment | - | - | 1 | - | - | 14 | - | - | 15 |
| Translation differences | 1 | - | 1 | 3 | 5 | 1 | 2 | 1 | 14 |
| Reclassification to assets held for sale | - | - | - | (7) | (11) | - | (1) | (35) | (54) |
| - | |||||||||
| Balance as at December 31, 2017 | 22 | 63 | 24 | 35 | 94 | 25 | 61 | 21 | 345 |
| Amortized Balance as at December 31 ,2017 | 326 | 153 | 67 | 45 | 89 | 14 | 15 | 13 | 722 |
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 1211 - Intangible Assets (cont'd)
| A. | Composition (cont'd) |
Goodwill | Concessions and mining rights | Trademarks | Technology / patents | Customer relationships | Computer application | Others | Total | |
$ millions | ||||||||
| As at December 31 | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
Cost | ||||||||
Balance as of January 1, 2020 | 323 | 209 | 86 | 84 | 176 | 99 | 69 | 1,046 |
Additions in respect of business combinations | 18 | 0 | 0 | 7 | 1 | 0 | 0 | 26 |
Additions | 0 | 0 | 0 | 1 | 0 | 18 | 2 | 21 |
Exit from consolidation | 0 | 0 | 0 | (5) | (10) | 0 | 0 | (15) |
Translation differences | 0 | 9 | 6 | 6 | 5 | 1 | 2 | 29 |
Balance as of December 31, 2020 | 341 | 218 | 92 | 93 | 172 | 118 | 73 | 1,107 |
Amortization and impairment losses | ||||||||
Balance as of January 1, 2020 | 21 | 70 | 28 | 49 | 114 | 68 | 44 | 394 |
Amortization | 0 | 2 | 3 | 5 | 9 | 7 | 2 | 28 |
Impairment | 0 | 0 | 0 | 0 | 0 | 0 | 5 | 5 |
Exit from consolidation | 0 | 0 | 0 | (2) | (3) | 0 | 0 | (5) |
Translation differences | 0 | 2 | 3 | 3 | 3 | 1 | 3 | 15 |
Balance as of December 31, 2020 | 21 | 74 | 34 | 55 | 123 | 76 | 54 | 437 |
Amortized Balance as of December 31 ,2020 | 320 | 144 | 58 | 38 | 49 | 42 | 19 | 670 |
| Intangible assets having a defined useful life | 332 | 365 |
| Intangible assets having an indefinite useful life | 339 | 357 |
| 671 | 722 |
ICL Group LimitedConsolidated Financial Statements48
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 1311 - Intangible Assets (cont'd)
| B. | Total book value of intangible assets having defined useful lives and those having indefinite useful lives are as follows: |
As of December 31 | ||
2021 | 2020 | |
$ millions | $ millions | |
Intangible assets having a defined useful life | 333 | 317 |
Intangible assets having an indefinite useful life | 534 | 353 |
867 | 670 |
Note 12 - Impairment Testing
| A. | Impairment testing for intangible assets with an indefinite useful life |
The goodwill is not monitored for internal reporting purposes and, accordingly, it is allocated to the Company’s operating segments and not to the cash-generating units, the level of which is lower than the operating segment.segment, as long as the acquired unit is presented in the Company’s reportable segments. The examination of impairment inof the carrying amount of the goodwill is made accordingly.
The carrying amounts of intangible assets with an indefinite useful life are as follows:
As of December 31 | ||
2021 | 2020 | |
$ millions | $ millions | |
Goodwill | ||
Phosphate Solutions | 114 | 116 |
Industrial Products | 91 | 94 |
Innovative Ag. Solutions* | 260 | 73 |
Potash | 19 | 19 |
Other | 18 | 18 |
502 | 320 | |
Trademarks | 32 | 33 |
534 | 353 |
| As at December 31 | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
* The increase is mainly from the acquisitions of Fertiláqua and ADS businesses. For further information, see Note 8B.
| Goodwill | ||
| Phosphate Solutions | 127 | 140 |
| Industrial Products | 92 | 93 |
| Innovative Ag. Solutions | 71 | 73 |
| Potash | 19 | 20 |
| 309 | 326 | |
| Trademarks | ||
| Industrial Products, United States | 13 | 13 |
| Phosphate Solutions, United States | 12 | 12 |
| Industrial Products, Europe | 5 | 6 |
| 30 | 31 | |
| 339 | 357 |
ICL Group LimitedConsolidated Financial Statements49
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 1312 - Impairment Testing (cont’d)(cont'd)
| A. | Impairment testing for intangible assets with an indefinite useful life (cont'd) |
did not identify any impairment. The recoverable amount of the operating segments was determined based on their value in use, which is an internal valuation of the discounted future cash flows that will be generated from the continuing operationoperations of the operating segments.
The examinations determined thatfuture cash flow of each operating segment was based on the carrying amount ofsegment approved five-year plan, which includes the segment estimations for revenues, operating income and other factors, such as working capital and capital expenditures. The segments’ projections were based, among other things, on the assumed sales volume growth rates based on long-term expectations, internal selling prices and raw materials prices based on external data sources, when applicable and relevant.
The key assumptions used to calculate the operating segmentssegments’ recoverable amounts are the nominal after‑tax discount rate of 8% and the long‑term growth rate of 2%, reflecting the industries and markets the Company is lower than their recoverable amount and, accordingly, no impairment loss was recognized.
involved in.
| Included in current assets and liabilities: | ||||
| Foreign currency and interest derivative instruments | 13 | (16) | 1 | (3) |
| Derivative instruments on energy and marine transport | - | (5) | 4 | - |
| 13 | (21) | 5 | (3) | |
| Included in non-current assets and liabilities: | ||||
| Foreign currency and interest derivative instruments | 15 | - | 64 | (3) |
| As at December 31 | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
| Short-term credit | ||
| From financial institutions | 544 | 635 |
| From the parent company | - | 175 |
| 544 | 810 | |
| Current maturities | ||
| Long-term loans from financial institutions | 32 | 12 |
| Long-term loans from others | 34 | - |
| Total Short-Term Credit | 610 | 822 |
| Long- term debt and debentures | ||
| Loans from financial institutions | 377 | 786 |
| Other loans | 35 | 98 |
| 412 | 884 | |
| Less – current maturities | 66 | 12 |
| 346 | 872 | |
| Marketable debentures | 1,195 | 1,241 |
| Non-marketable debentures | 274 | 275 |
| Total Long- term debt and debentures | 1,815 | 2,388 |
| As at December 31 | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
| Balance as at January 1 | 3,227 | 3,399 |
| Changes from financing cash flows | ||
| Receipt of long-term debt | 1,746 | 966 |
| Repayment of long-term debt | (2,115) | (1,387) |
| Repayment of short-term credit, net of receipt | (283) | 147 |
| Interest paid | (103) | (111) |
| Total net financing cash flows | (755) | (385) |
| Effect of changes in foreign exchange rates | (63) | 101 |
| Other changes | 33 | 112 |
| Balance as at December 31 | 2,442 | 3,227 |
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 1513 - Credit from Banks and Others (cont’d)
| A. | Composition |
| As at December 31 | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
| Second year | 17 | 261 |
| Third year | 273 | 18 |
| Fourth year | 113 | 213 |
| Fifth year | 308 | 644 |
| Sixth year and thereafter | 1,104 | 1,252 |
| 1,815 | 2,388 |
As of December 31 | |||
2021 | 2020 | ||
$ millions | $ millions | ||
Short-term debt | ||
From financial institutions | 327 | 296 |
Current maturities of: | ||
Debentures | 131 | 206 |
Long-term loans from financial institutions | 56 | 90 |
Lease Liability | 63 | 64 |
Long-term loans from others | 0 | 23 |
250 | 383 | |
Total | 577 | 679 |
Long- term debt and debentures | ||
Long term lease liability | 299 | 325 |
Loans from financial institutions | 679 | 194 |
Other loans | 0 | 24 |
978 | 543 | |
Marketable debentures | 1,517 | 1,618 |
Non-marketable debentures | 191 | 275 |
1,708 | 1,893 | |
2,686 | 2,436 | |
Less – current maturities of: | ||
Debentures | 131 | 206 |
Long-term loans from financial institutions | 56 | 90 |
Lease liability | 63 | 64 |
Long-term loans from others | 0 | 23 |
250 | 383 | |
Total Long- term debt | 2,436 | |
2,053 |
For further information, see Note 21.
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 1513 - Credit from Banks and Others (cont'd)
| B. | Yearly movement in Credit from Banks and Others (*) |
As of December 31 | ||
2021 | 2020 | |
$ millions | $ millions | |
Balance as of January 1 | 2,660 | 2,559 |
Changes from financing cash flows | ||
Additions in respect of business combination | 171 | 0 |
Receipt of long-term debts | 1,230 | 1,175 |
Repayment of long-term debt | (1,120) | (1,133) |
Repayment of short-term credit | (58) | (52) |
Interest paid | (112) | (109) |
Receipt (payments) from transaction in derivatives | (17) | 24 |
Total net financing cash flows | 94 | (95) |
Initial recognition of lease liability | 37 | 80 |
Interest expenses | 126 | 120 |
Effect of changes in foreign exchange rates | (21) | 84 |
Change in fair value of derivatives | (24) | (53) |
Other changes | 42 | (35) |
Balance as of December 31 | 2,914 | 2,660 |
(*) The balance includes Short-term debt, derivatives on loans and debentures, loans and debentures and interest payables.
ICL Group LimitedConsolidated Financial Statements52
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 13 - Credit from Banks and Others (cont'd)
| C. | Sale of receivables under securitization transaction |
In 2015,September 2020, the Company and certain Group subsidiaries (hereinafter – the Subsidiaries) signed a series of agreements regarding a securitization transaction with three international banks (hereinafter – the Lending Banks) for the sale of their trade receivables to a foreignspecial company which was established specifically for this purpose and which is not owned by the ICL Group (hereinafter – the Acquiring Company).
The Company'sCompany’s policy is to utilize the securitization limit based on its cash flow needs, alternative financing sources and market conditions. The new securitization agreement will expire in July 2020. UnderAccording to the agreements, ICLAgreements, the Company undertook to comply with a financial covenant wherebyaccording to which the ratio of net debt to EBITDA will not exceed 4.75. If ICLthe Company does not meet with this ratio, the Acquiring Company can discontinue acquiring new trade receivables (without affecting the existing acquisitions). As at the date of the report, ICL meetreporting date, the Company complies with the above financial covenant.
The Acquiring Company finances acquisition of the debts by means ofthrough a loan received from a financial institution whichthat is not related to ICL. As at December 31, 2018,affiliated with the amount of the securitization framework is $350 million.
Company. The period induring which the Subsidiaries are entitled to sell their trade receivables to the Acquiring Company is five years from the closing date of the transaction, where both parties have the option, at the end of each year, to give notice of cancellation ofnotify for the transaction.transaction’s cancellation. Once the Company has transferred its trade receivables, it no longer has the right to sell them to another party. The selling price of the trade receivables is the amount of the debt sold, less the calculated interest cost based on the anticipatedexpected period between the sale date of the customer debt and its repayment date. Upon acquisition of the debt, the Acquiring Company pays mostpart of the debt price in cash and the remainder in a subordinated note, which is paid after collection of the debt sold. The rate of the cash consideration varies according todepending on the composition and behavior of the customer portfolio. The Subsidiaries continue to handle the collection of the trade receivables included in the securitization transaction, on behalf of the Acquiring Company. In the case of a credit default, the Company bears approximately 30% of the overall secured trade receivable balance.
In addition, as part of the agreementsAgreements set several conditions were set in connection withregarding the quality of the customer portfolios, which give the Lending Banks the option to endof terminating the undertaking or determine that some ofexcluding the Subsidiaries, thesubsidiaries whose customer portfolios of which do not meet the provided conditions provided, will no longer be includedfrom the Agreements.
The trade receivables are fully presented in the securitization agreements.
| Year ended December 31, | |||
| 2018 | 2017 | 2016 | |
| $ millions | $ millions | $ millions | |
| Carrying amount of the transferred assets | 332 | 331 | 331 |
| Fair value of the associated liabilities | 332 | 331 | 331 |
| Net position * | - | - | - |
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 1513 - Credit from Banks and Others (cont'd)
| Instrument type | Loan date | Original principal (millions) | Currency | Carrying amount ($ millions) | Interest rate | Principal repayment date | Additional information |
| Loan-Israeli institutions | November 2013 | 300 | Israeli Shekel | 67 | 4.74% (1) | 2015-2024 (annual installment) | Partially prepaid |
| Debentures (private offering) – 3 series | January 2014 | 84 145 46 | U.S Dollar | 84 144 46 | 4.55% 5.16% 5.31% | January 2021 January 2024 January 2026 | |
| Loan-international institutions | July 2014 | 27 | Euro | 25 | 2.33% | 2019-2024 | Partially prepaid |
| Debentures - Series D | December 2014 | 800 | U.S Dollar | 182 | 4.50% | December 2024 | (2) |
| Loan - European Bank | December 2014 | 161 | Brazilian Real | 19 | CDI+1.35% | 2015-2021 (Semiannual installment) | |
| Debentures - Series E | April 2016 | 1,569 | Israeli Shekel | 416 | 2.45% | 2021- 2024 (annual installment) | |
| Loan - others | April - October, 2016 | 600 | Chinese Yuan Renminbi | 29 | 5.23% | 2019 | (3) |
| Loan - Asian Banks | June - October, 2018 | 600 | Chinese Yuan Renminbi | 87 | 4.79% - 5.44% | 2019 | |
| Loan - Asian Bank | April 2018 | 400 | Chinese Yuan Renminbi | 58 | CNH Hibor + 0.50% | 2019 | |
| Debentures - Series F | May 2018 | 600 | U.S Dollar | 596 | 6.38% | May 2038 | (4) |
| Loan - European Bank | December 2018 | 70 | U.S Dollar | 70 | Libor + 0.66% | December 2021 |
| D. | Information on material loans and debentures outstanding as of December 31, 2021: |
Instrument type | Loan date | Original principal (millions) | Currency | Carrying amount ($ millions) | Interest rate | Principal repayment date | Additional information |
Debentures - Series F | May 2018, December 2020 | 693 | U.S. Dollar | 715 | 6.38% | May 2038 | (4), (5) |
Debentures - Series E | April 2016 | 1,569 | Israeli Shekel | 378 | 2.45% | 2021- 2024 (annual installment) | Partially repaid (1), (4) |
Debentures (private offering) – 3 series | January 2014 | 275 | U.S. Dollar | 145 46 | 5.16% 5.31% | January 2024 January 2026 | (1) |
Debentures - Series G | January/May 2020 | 766 | Israeli Shekel | 241 | 2.40% | 2022- 2034 (annual installment) | (4) |
Debentures - Series D | December 2014 | 184 | U.S. Dollar | 183 | 4.50% | December 2024 | (4), (5) |
| SLL | September 2021 | 250 | Euro | 282 | 0.80% | September 2026 | (2) |
Loan - European Bank | September 2021 | 25 | Euro | 28 | 0.95% | June 2025 | (3) |
Loan-Israeli institutions | November 2013 | 300 | Israeli Shekel | 56 | 4.74% | 2015-2024 (annual installment) | Partially repaid |
Loan - Asian Bank | May 2020, May 2021 | 151 | Chinese Yuan | 20 | 4.25%-4.95% | December 2020 - May 2023 March 2021-March 2024 | Partially repaid |
September 2020, March 2021 | 380 | 56 | 4.25%-4.40% | ||||
Loan - Brazilian Bank | December 2014-January 2021 | 350 | Brazilian Real | 47 | 4%-8% | January 2015-June 2025 | Partially repaid |
| Issuer | European bank (1) | Group of twelve international banks (2) | European bank (3) |
| Date of the credit facility | March 2014 | March 2015 | December 2016 |
| Date of credit facility termination | March 2019 | March 2023 | May 2025 |
| The amount of the credit facility | USD 35 million Euro 100 million | USD 1,200 million | USD 100 million |
| Credit facility has been utilized | Euro 40 million | USD 200 million | USD 70 million |
| Interest rate | Up to 33% use of the credit: Libor/Euribor + 0.90%. From 33% to 66% use of the credit: Libor/Euribor + 1.15% 66% or more use of the credit: Libor/Euribor + 1.40% | Up to 33% use of the credit: Libor/Euribor + 0.70%. From 33% to 66% use of the credit: Libor/Euribor + 0.80% 66% or more use of the credit: Libor/Euribor + 0.95% | Libor + 0.45% + spread |
| Loan currency type | USD and Euro loans | USD and Euro loans | USD loans |
| Pledges and restrictions | Financial covenants - see Section D, a cross-default mechanism and a negative pledge. | Financial covenants - see Section D, a cross-default mechanism and a negative pledge. | Financial covenants - see Section D and a negative pledge. |
| Non-utilization fee | 0.32% | 0.21% | 0.30% |
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 1513 - Credit from Banks and Others (cont'd)
| D. | Information on material loans and debentures outstanding as of December 31, 2021: (cont'd) |
Additional Information:
| (1) | In January 2021, the Company repaid $84 million of a private placement bond as scheduled. In March 2021, the Company repaid NIS 392 million (about $118 million) of Series E debentures, out of the total NIS 1,569 million (about. $487 million), as scheduled. In December 2021 the Company repaid an amount of $ 69.4 million in accordance with the agreement of loan with European Bank. | |
| (2) | In September 2021, the Company entered into a new sustainability linked loan (SLL) agreement in the amount of €250 million, with a five-year term through 2026 and a fixed annual interest rate of 0.8%. The loan was entered into with a group of five leading global lenders. The loan is an innovative step forward in the Company’s ongoing sustainability efforts and includes three sustainability performance targets: (1) an annual 4% to 5% reduction in direct and indirect Scope 1 and Scope 2 CO2e emissions resulting from ICL global operations. (2) Through 2025, the Company is committed to adding a significant number of Tfs (Together for Sustainability) qualified vendors each year who meet criteria of management, environment, health and safety, labor and human rights, ethics, and governance and (3) for women to hold at least 25% of senior management roles, by the end of 2024. | |
| (3) | In September 2021, ICL Iberia signed a new loan agreement in the amount of €25 million with a 45-month term through 2025 and a fixed annual interest rate of 0.95%. | |
| (4) | On June 23, 2021, the credit rating agency S&P reaffirmed the Company’s international credit rating and senior unsecured rating 'BBB-’. In addition, the credit rating agency S&P Ma’alot reaffirmed the Company’s credit rating 'ilAA’ with a stable rating outlook. As of December 31, 2021, the Company is in compliance with all its financial covenants set forth in its financing agreements. For more details see note 13F. | |
| (5) | On June 21, 2021, the credit rating agency Fitch Ratings reaffirmed the Company’s long-term issuer default rating and senior unsecured rating at 'BBB-’. The outlook on the long-term Issuer default rating is stable. |
ICL Group LimitedConsolidated Financial Statements55
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 13 - Credit from Banks and Restrictions Placed in RespectOthers (cont'd)
| E. | Credit facilities: |
Issuer | Group of international banks (1) | European bank | Brazilian bank (2) |
| Date of the credit facility | March 2015 | December 2016 | March 2021 |
Date of credit facility termination | March 2025 | May 2024 | March 2023 |
The amount of the credit facility | USD 1,200 million | USD 30 million | BRL 230 million |
Credit facility has been utilized | Euro 150 million | USD 30 million | BRL 180 million |
Interest rate | Up to 33% use of the credit: Libor/Euribor + 0.70%. From 33% to 66% use of the credit: Libor/Euribor + 0.80% 66% or more use of the credit: Libor/Euribor + 0.95% | 30 million dollar-Libor + 0.80% | CDI + 0.95% |
Loan currency type | USD and Euro loans | USD loans | BRL loans |
Pledges and restrictions | Financial covenants - see Section D, a cross-default mechanism and a negative pledge. | Financial covenants - see Section D and a negative pledge. | - |
Non-utilization fee | 0.21% | 0 | 0 |
| (1) | In October 2021, an additional bank joined the credit facility agreement, increasing the revolving credit facility by an additional $100 million, leading to a total amount of $1.2 billion. Most banks signed on to continue the credit facility agreement and from March 2023 to March 2025, the total credit facility will amount to $1 billion. As of December 31, 2021, the Company had utilized approximately $170 million of the facility’s framework. |
| (2) | In March 2021, the Company signed a framework credit facility agreement with MUFG Bank for a period of two years, according to which the Company can withdraw up to BRL 230 million (about $42 million). As of December 31, 2021, the Company has withdrawn BRL 180 million (about $32 million), with a maturity date of March 2023. |
ICL Group LimitedConsolidated Financial Statements56
Notes to the Consolidated Financial Statements as of LiabilitiesDecember 31, 2021
Note 13 - Credit from Banks and Others (cont'd)
| F. | Restrictions on the Group relating to the receipt of credit |
As part of the loan’s agreements the Company has signed, various restrictions apply including sustainability performance targets and financial covenants, a cross‑default mechanism and a negative pledge.
Set forth below is information regarding the financial covenants applicable to the Company as part of the loan agreements and the compliance therewith.
Financial Covenants:
Financial Covenants (1) | Financial Ratio Required under the Agreement | Financial Ratio |
December 31, 2021 |
Total shareholder’s equity | Equity greater than $2,000 million | $4,527 million |
Ratio of EBITDA to the net interest expenses | Equal to or greater than 3.5 | 14.98 |
Ratio of the net financial debt to EBITDA | Less than 3.5 | 1.38 |
Ratio of certain subsidiaries loans to the total assets of the consolidated company | Less than 10% | 4.51% |
| (1) | The examination of compliance with the financial covenants is based on the Company’s consolidated financial statements. As of December 31, 2021, the Company complies with all of its financial covenants. |
Pledges and Restrictions Placed in Respect of Liabilities |
| (1) | The |
As |
| As at December 31 | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
| Employees | 284 | 269 |
| Accrued expenses | 85 | 83 |
| Governmental (mainly in respect of royalties) (1) | 61 | 67 |
| Current tax liabilities | 112 | 88 |
| Others | 105 | 88 |
| 647 | 595 |
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 1714 – Other Payables
As of December 31 | ||
2021 | 2020 | |
$ millions | $ millions | |
Employees | 414 | 322 |
Current tax liabilities | 183 | 87 |
Governmental (mainly in respect of royalties) | 103 | 75 |
Accrued expenses | 75 | 76 |
Income received in advance | 33 | 17 |
Derivative designated as an economic hedge | 3 | 43 |
Others | 101 | 84 |
912 | 704 |
Note 15 - Taxes on Income
| A. | Taxation of companies in Israel |
The current and deferred taxes expenses of Israeli entities are booked under the applicable tax rates below:
| 1. | Income tax rate |
The Israeli statutory primary income tax rate is 23%.
| 2. | Tax benefits under the Israeli Law for the Encouragement of Capital Investments, 1959 (hereinafter – the Encouragement Law) |
a) Beneficiary Enterprises
The production facilities of some of the Company’s subsidiaries in Israel (hereinafter – the Subsidiaries) have received “Beneficiary Enterprise” status under the Encouragement law as worded after Amendment No. 60 to the Law was published in April 2005.
The main benefit granted to the companySubsidiaries is mainlya preferred tax rate.
Under the “Ireland” track, the Company paid a reduced tax rate of 11.5% as of 2008 on parts of its income. The benefit deriving from the "Ireland" track ended in 2017, excludinga single entity in Israel for which the entitlement ended in 2021.
The part of taxable income entitled to benefits at reduced tax rates.
rates is calculated based on the ratio of the “Beneficiary Enterprise”turnover to a company’s total turnover. The Company chose 2005 asturnover attributed to the “Beneficiary Enterprise” is generally calculated according to the increase in the turnover compared to a “base” turnover, which is the average turnover in the three years prior to the election year of a "tax exemption" track. The benefits deriving from this track ended in 2014. Within those years the Company benefited from reduced tax rates as well as in some cases full tax exemption.
“Beneficiary Enterprise”.
A company having a “Beneficiary Enterprise” that distributes a dividend out of exempt income, will be subject to companiescorporate tax in the year in which the dividend was distributed on the amount distributed (including the amount of the companiescorporate tax applicable amount due to the distribution) at the tax rate applicable under the Encouragement Law in the year in which the income was produced,generated, had it not been exempt from tax.
ICL Group LimitedConsolidated Financial Statements58
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 1715 - Taxes on Income (cont’d)
| A. | Taxation of companies in Israel (cont'd) |
| 2. | Tax benefits under the Israeli Law for the Encouragement of Capital Investments, 1959 (cont'd) |
a) Beneficiary Enterprise (cont'd)
On November 15, 2021, the Israeli Economic Efficiency Law for the years 2021 and 2022 was published, which consists of numerous legislative amendments and arrangements, including an amendment to Section 74 of the Encouragement Law, which deals with the identification of Capital Investments, 1959 (cont’d)
The benefit derivingamendment stipulates that in any dividend distribution from the "Ireland" track ended in 2017.
In addition, a temporary provision to the Encouragement Law was published, which offers a reduced tax payment arrangement to companies that have trapped earnings. The temporary provision, which is valid until November 14, 2022, stipulates that companies that have chosen to apply it, will be entitled to benefitsa tax rebate on corporate income tax, for the released trapped earnings. The release of trapped earnings allows their distribution at reduceda beneficiary corporate tax rates is calculated based onrate according to the ratio of the turnover of the “Beneficiary Enterprise” to the Company’s total turnover. distributed profits.
The turnover attributed to the “Beneficiary Enterprise” is generally calculatedbeneficiary corporate tax will be determined according to the increaseratio of the trapped earnings that the company seeks to release from all its trapped earnings. It will range between 40% to 70% of the corporate tax rate that would have applied to income in the turnover comparedyear it was generated, but in any case, not less than 6%. Eligibility for the beneficiary corporate tax rate is conditional on a company's decision to a “base” turnover, which isrelease part or all of its trapped earnings and the average turnoverpayment of the tax due until November 14, 2022, as well as on making investments in the threecompanies' industrial plants over five years, priorin accordance with the formula set forth in the amendment.
Considering the above-mentioned amendment, the Company assessed its deferred tax liabilities with regards to the year of electionpossibility to release trapped earnings in its future dividend distributions. In December 2021, due to the Company's settlement agreement with the Israeli Tax Authorities, regarding tax assessments for the years 2015-2019, and as a result of the “Beneficiary Enterprise”Company's decision to apply the said temporary provision, the Company recognized a tax provision for the release of trapped earnings in the total amount of $47 million. Accordingly, no additional tax provision is required in respect of the unreleased trapped earnings which as of December 31, 2021, amounted to about NIS 950 million ($305 million).
ICL Group LimitedConsolidated Financial Statements59
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 15 - Taxes on Income (cont'd)
| A. | Taxation of companies in Israel (cont'd) |
| 2. | Tax benefits under the Israeli Law for the Encouragement of Capital Investments, 1959 (cont'd) |
b)Preferred Enterprises
The Amendment does not apply to an Industrial Enterprise that is a mine, or any other facility for production of minerals or a facility for exploration of fuel. Therefore, ICL plants that are defined as mining plants and mineral producers will not be able to take advantage of the tax rates included as part of the Amendment.
The tax rates applicable to Preferred Enterprises in Israel:
| 1) | Preferred Enterprises located in Development Area A – 7.5%. |
| 2) | Preferred Enterprises located in the rest of the country – 16%. |
In addition, on August 5, 2013, the Law for Change in the Order of National Priorities, 2013, was passed byNovember 2015, the Knesset which provides that the tax rate applicable to a Preferred Enterprise in Development Area A will be 9% whereas the tax applicable to companies in the rest of Israel will be 16%. Pursuant to the amendment to the Encouragement law that was approved as part ofpassed the Economic Efficiency Law, (Legislative Amendments for Achieving the Budget Targets for 2017 and 2018), 2016, the tax rate applicable to enterprises in the suburban areas was reduced from 9% to 7.5%. The Company has Preferred Enterprises at the tax rate of 7.5%.
It is further provided in the Amendment that tax will not apply to a dividend distributed out of preferred income to a shareholder that is an Israeli‑resident company. A dividend distributed out of preferred income to a shareholder that is an individual or a foreign resident is subject to tax at thea rate of 20%, unless a lower tax rate applies under a relevant treaty for prevention of double taxation.
ICL Group LimitedConsolidated Financial Statements60
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 15 - Taxes on Income (cont'd)
| A. | Taxation of companies in Israel (cont'd) |
The Law for the Encouragement of Industry (Taxation), 1969 |
a) | Some of the Company’s Israeli subsidiaries are “Industrial Enterprise”, as defined in the |
b) | The Industrial Enterprises owned by some of the Company's Israeli subsidiaries have a common line of production or similar industrial branch activity and, therefore, they file, together with the Company, a consolidated tax return in accordance with Section 23 of the Law for the Encouragement of Industry. Accordingly, each of the said companies is entitled to offset its tax losses against the taxable income of the other companies. |
| 4. | The Law for Taxation of Profits from Natural Resources |
The Law for Taxation of Profits from Natural Resources (hereinafter – the Law), is effective since January 1, 2016. The government take on natural resources in Israel includes three elements: Royalties, Natural ResourcesCorporate Income Tax and Companies Income Tax.Surplus Profit Levy. The highlights of the Law are set forth below:
Royalties:
In accordance with the Mines Ordinance, the rate of the royalties, in connection with resources produced from the quarries, will be 5%. For production of phosphates, the royalty rate is 5% of the value of the quantity produced.
Imposition of Surplus Profit Levy:
The taxable profit is based on the ratemineral operating income, as adjusted, after a deduction of 5% of the mineral’s averageyear end working capital, and less an amount that reflects a yield of 14% on the value of property, plant and equipment used for production and sale of the quarried material (hereinafter – the Yield on the Property, Plant and Equipment)Yield).
On the tax base, as stated, a progressive tax will be imposed at a rate to be determined based on the Yield on the Property, Plant and Equipment in that year. For thea Yield on the Property, Plant and Equipment between 14% and 20%, Natural Resources Tax will be imposed at the rate of 25%, while the yieldYield in excess of 20% will be subject to Natural Resources Tax at the rate of 42%. In years in which the Natural Resources Tax base is negative, the negative amount will be carried forward from year to year and will constitute a tax shield in the succeeding tax year. The above computations, including the right to use prior years’ losses, are made separately, without taking into accountconsidering setoffs, for each natural resource production and sale activity.
ICL Group LimitedConsolidated Financial Statements61
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 15 - Taxes on Income (cont'd)
| A. | Taxation of companies in Israel (cont'd) |
| 4. | The Law for Taxation of Profits from Natural Resources (cont'd) |
Imposition of Surplus Profit Levy: (cont'd)
Limitations on the Natural Resources Tax – the Natural Resources Tax will only apply to profits deriving from the actual production and sale of each of the following resources: potash, bromine, magnesium and phosphates, and not to the profits deriving from the downstream industrial activities. Calculation of the Natural Resources Tax will be made separately for every mineral.mineral mining concession. Nonetheless, regarding Magnesium,magnesium, it was provided that commencing from 2017, upon sale of carnaliteCarnalite by DSW to Magnesiummagnesium and reacquisition of a SylviniteSylvinite by‑product by DSW, Magnesiummagnesium will charge DSW $100 per tonne of potash, which is produced from the Sylvinite (linked to the CPI).
A mechanism was provided for determination of the market price, with respect to transactions in natural resources executed between related parties in Israel, as well as a mechanism for calculation of the manner for costs allocation of the expenses between the production and sale of the natural resource, on the one hand, and the downstream activities, on the other hand.
Regarding the bromine resource, the Natural Resources Tax will apply in the same manner in which it applies to the other natural resources, except with respect to the mannersale price of determining the transfer price in sales madebromine sold to related parties, in and outside of Israel.Israel, who use the bromine for bromine compounds manufacturing activities, shall be, in each tax year, the higher of:
| 1) | Actual price in the sale transaction. |
| 2) | A price which will provide an operating profit for the bromine compounds manufacturer of 12% out of the revenue it generates from bromine compounds sales. |
Regarding the phosphate resource, for purposesthe sale price of calculating the total revenues from phosphate sold to related parties for purposes of downstream manufacturing activities shall be, in everyeach tax year, a calculation method will be employed (Netback) whereby the price will be determined based on the higher of the following:of:
| 1) | Actual price |
| 2) |
| 3) | The production and operating costs attributable to a unit of phosphate. |
The Company took aan alternative tax filing position, according to which, all the Dead Sea minerals should be taxed as a unified mineral under the above-mentioned mechanism.mechanism as the natural resource that is used by the company is the Dead-Sea brine.
ICL Group LimitedConsolidated Financial Statements62
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 15 - Taxes on Income (cont'd)
| A. | Taxation of companies in Israel (cont'd) |
| 4. | The Law for Taxation of Profits from Natural Resources (cont'd) |
Corporate income Tax:
The Law for Encouragement of Capital Investments was revised such that the definition of a “Plant for Production of Quarries” will include all the plant’s activities up to production of the first marketable natural resource of potash, bromine, magnesium and phosphates. Accordingly, activities involved with production of the resource will not be entitled to tax benefits under the Law, whereas activities relating to downstream products, such as bromine compounds, acids and fertilizers, will not constitute a base for calculatingbe entitled to tax benefits under the Excess Profits Tax and will not be exempted from inclusion in the Law.
The Natural Resource Tax will be deductible from the Company's taxable income and the Company will pay the CompaniesCorporate Tax on the balance as is customary in Israel.
Amendment number 3 to the Consolidated Financial Statements as at December 31, 2018Law
In November 2021, Amendment number 3 to the Law was approved by the Israeli Kneset, according to which the arrangement of tax collection will be altered so that companies will be required to pay 75% of the disputed tax, after objecting to a tax assessment by appeal to the district court, and prior to a Court ruling. Prior to this amendment, the payment of the Surplus Profit Levy in dispute was not required until a Court ruling is rendered. This amendment may impact the collection of Surplus Profit Levy from the Company for the years 2016 and onwards.
| B. | Taxation of non-Israeli subsidiaries |
Subsidiaries incorporated outside of Israel are assessed for tax under the tax laws in their countries of residence. The principal tax rates applicable to the major subsidiaries outside Israel are as follows:
| Country | Tax rate | Note | Tax rate | Note |
| Brazil | 34% | 34% | ||
| Germany | 29% | 29% | ||
| United States | 26% | (1) | 26% | (1) |
| Netherlands | 25% | (3) | 25% | |
| Spain | 25% | 25% | ||
| China | 25% | 25% | ||
| United Kingdom | 19% | (2) | 19% |
| (1) | The tax rate |
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 1715 - Taxes on Income (cont'd)
| C. | Carried forward tax losses |
As atof December 31, 2018,2021, the balances of the carryforward tax losses of subsidiaries for which deferred taxes were recorded, is about $477$286 million (December 31, 20172020 – about $308$418 million).
As atof December 31, 2018,2021, the
As at of December 31, 2018,2021, the capital losses for tax purposes available for carryforward to future years for which deferred taxes were not recorded is about $134$161 million (December 31, 20172020 – about $159$163 million).
| D. | Tax assessments |
(1) | The Company and the main operational companies in Israel (DSW, Rotem, Bromine, DSM, |
Regarding the tax assessment for the years 2012‑2014 issued by the Israeli Tax Authorities |
Regarding the tax assessment for the year 2015 issued by the ITA, in December 2021, the Company reached an agreement with the ITA regarding the tax years |
(3) | The |
ICL Group LimitedConsolidated Financial Statements64
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 1715 - Taxes on Income (cont'd)
| E. | Uncertain Tax Position |
The measurement of the estimated Tax provisions as at December 31, 2018, requires judgment relatingrelated to certain tax positions, which may result in future demand for additional tax payments by the Tax authorities. A tax provision will beis recorded only when the Company estimates that the chances of its positionsposition to be accepted are lower than the chances theyit will be rejected. It is possible that the tax authorities will demand additional tax payments that are not known to the Company at this stage.
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,reporting date, 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 on a number of several significant matters, which require management’s judgment.
The 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 revaluationReplacement cost is in accordance with one of the permitted methods inan accounting method according to International Financial Reporting Standards (IFRS), which apply toare the accepted accounting principles in Israel, applied by the Company and its SubsidiariesSubsidiaries. The presentation of property, plant and are accepted accounting principlesequipment in Israel. Therethe Subsidiaries' financial statements according to the aforesaid method, is no resulting changenot reflected in the Company's consolidated financial statements.
As part of the preparation of the Subsidiaries' financial statements, the Company received an opinion from an independent appraiser regarding the fair value of the property, plant and equipment, which was based on the Replacement Cost methodology (as used assets). According to the opinion, the fair value of the property, plant and equipment was estimated at about $6 billion, as of December 31, 2015, the date the Law entered into effect.
ICL Group LimitedConsolidated Financial Statements65
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 15 - Taxes on Income (cont'd)
| E. | Uncertain Tax Position (cont'd) |
Given the mineral's price environment, its effect on the profitability of the Subsidiaries and after deduction of a 14% allowed deductible on the balance of property, plant and equipment, as stated in the law and based on the replacement cost, as of December 31, 2021, no natural resources tax liability was payable. In respect of the phosphate resource, due to prior years' losses, no natural resources tax liability was payable.
The tax authority's Tax 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 regarding matters other thanwith respect to the measurementcarrying amount for natural resources tax purposes of the property, plantplant and equipment. If
Should the above-mentioned tax position is rejected byITA, 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 rejectsthe Company's arguments with respect to this issue, the result wouldcan be an increase in the company'sCompany's tax liabilities in an aggregate amount of about $100 $237million (including interest and linkage and net of corporate income tax) for the years 2016-2018.
2016‑2021. The Company estimatesbelieves that it is more likely than not that its position will be accepted. As at
In March 2021, the dateITA issued an assessment for the years 2016‑2017, which includes a demand for payment of Surplus Profit Levy, in the report,amount of approximately $77 million, plus interest and linkage. The amount represents, in essence, the Company believes thatdifferent interpretation regarding the tax provision in its financial statements represents the best estimatemeasurement of the tax payment expected to be incurred with reference to the Law.
equipment. The total royalties paid by the companyCompany submitted its objection to the Israeli government in 2018 amounted to $133 million (see Note 20).ITA. As of the reporting date, no decision has yet been made regarding the said objection.
ICL Group LimitedConsolidated Financial Statements66
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 1715 - Taxes on Income (cont'd)
| F. | Deferred income taxes |
| 1. | The composition of the deferred taxes and the changes therein, are as follows: |
In respect of financial position | In respect of carry forward tax losses | Total | ||||
Depreciable property, plant and equipment and intangible assets | Inventories | Provisions for employee benefits | Other | |||
$ millions | ||||||
Balance as of January 1, 2020 | (421) | 32 | 84 | 19 | 54 | (232) |
Changes in 2020: | ||||||
Amounts recorded in the statement of income | (17) | 6 | 13 | (28) | 60 | 34 |
Amounts recorded to a capital reserve | 0 | 0 | (6) | 0 | (3) | (9) |
Translation differences | (1) | 0 | 3 | 2 | 4 | 8 |
Balance as of December 31, 2020 | (439) | 38 | 94 | (7) | 115 | (199) |
Changes in 2021: | ||||||
Additions in respect of business combinations | 0 | 1 | 1 | 9 | 2 | 13 |
Amounts recorded in the statement of income | 16 | 0 | 2 | (14) | (24) | (20) |
Amounts recorded to a capital reserve | 0 | 0 | (22) | (1) | 0 | (23) |
Translation differences | 2 | 0 | (2) | (3) | (5) | (8) |
Balance as of December 31, 2021 | (421) | 39 | 73 | (16) | 88 | (237) |
| 2. | The currencies in which the deferred taxes are denominated: |
| Balance as at January 1, 2017 | (374) | 45 | 75 | 2 | 99 | (153) |
| Changes in 2017: | ||||||
| Amounts recorded in the statement of income | 74 | (17) | 1 | 11 | (36) | 33 |
| Change in tax rate | 13 | - | - | - | - | 13 |
| Amounts recorded to a capital reserve | - | - | 3 | 5 | - | 8 |
| Translation differences | (6) | - | 5 | - | 1 | - |
| Transfer to the group assets held for sale | 2 | - | - | 1 | - | 3 |
| Balance as at December 31, 2017 | (291) | 28 | 84 | 19 | 64 | (96) |
| Changes in 2018: | ||||||
| Amounts recorded in the statement of income | (123) | (2) | (6) | - | 55 | (76) |
| Amounts recorded to a capital reserve | - | - | (3) | 2 | - | (1) |
| Translation differences | 2 | - | (1) | (1) | (2) | (2) |
| Balance as at December 31, 2018 | (412) | 26 | 74 | 20 | 117 | (175) |
As of December 31 | ||
2021 | 2020 | |
$ millions | $ millions | |
Euro | 84 | 73 |
Brazilian Real | 13 | (4) |
British Pound | 0 | 17 |
U.S Dollar | (10) | (6) |
Israeli Shekels | (327) | (280) |
Other | 3 | 1 |
(237) | (199) |
ICL Group LimitedConsolidated Financial Statements67
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 1715 - Taxes on Income (cont'd)
| G. | Taxes on income included in the income statements |
| 1. | Composition of income tax expenses (income) | |
| As at December 31 | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
For the year ended December 31 | |||
2021 | 2020 | 2019 | |
$ millions | $ millions | $ millions | |
| Euro | 22 | 33 |
| British Pound | 21 | 22 |
| U.S Dollar | (7) | 10 |
| Israeli Shekels | (204) | (166) |
| Other | (7) | 5 |
| (175) | (96) |
Current taxes | 145 | 70 | 91 |
Deferred taxes | 22 | (43) | ��61 |
Taxes in respect of prior years | 93 | (2) | (5) |
260 | 25 | 147 |
| For the year ended December 31 | |||
| 2018 | 2017 | 2016 | |
| $ millions | $ millions | $ millions | |
| Current taxes | 53 | 208 | 68 |
| Deferred taxes | 76 | (23) | (45) |
| Taxes in respect of prior years | - | (27) | 32 |
| 129 | 158 | 55 |
| 2. | Theoretical tax |
Following is a reconciliation of the theoretical tax expense, assuming all income is taxed at the regular tax rates in Israel (see A(2) above) and the tax expense presented in the statements of income:
| For the year ended December 31 | |||
| 2018 | 2017 | 2016 | |
| $ millions | $ millions | $ millions | |
For the year ended December 31 | |||
2021 | 2020 | 2019 | |
$ millions | $ millions | $ millions | |
Income before taxes on income, as reported in the statements of income | 1,092 | 49 | 628 |
Statutory tax rate (in Israel) | 23% | 23% | 23% |
Theoretical tax expense | 251 | 11 | 144 |
Add (less) – the tax effect of: | |||
Reduced tax due to tax benefits | (64) | (6) | (8) |
Differences deriving from additional deduction and different tax rates applicable to foreign subsidiaries | (10) | (4) | (15) |
Tax on dividend | 3 | 2 | 2 |
Deductible temporary differences and their reversal (including carryforward losses) for which deferred taxes assets were not recorded and non–deductible expenses | (8) | 14 | 17 |
Taxes in respect of prior years* | 93 | (2) | (5) |
Differences in measurement basis | (8) | 10 | 15 |
Other differences | 3 | 0 | (3) |
Taxes on income included in the income statements | 260 | 25 | 147 |
| Income (loss) before income taxes, as reported in the statements of income | 1,364 | 505 | (117) |
| Statutory tax rate (in Israel) | 23% | 24% | 25% |
| Theoretical tax expense (income) | 314 | 121 | (29) |
| Add (less) – the tax effect of: | |||
| Tax benefits deriving from the Law for Encouragement of Capital Investments net of natural Resources Tax | (20) | (4) | (3) |
| Differences deriving from additional deduction and different tax rates applicable to foreign subsidiaries (1) | (186) | 23 | (38) |
| Income taxes from intercompany dividend distribution | - | 18 | - |
| Deductible temporary differences for which deferred taxes assets were not recorded and non–deductible expenses | 24 | 15 | 135 |
| Taxes in respect of prior years | - | (27) | 32 |
| Impact of change in tax rates | - | (13) | (32) |
| Differences in measurement basis (mainly ILS vs USD) | (11) | 18 | 1 |
| Other differences | 8 | 7 | (11) |
| Taxes on income included in the income statements | 129 | 158 | 55 |
ICL Group LimitedConsolidated Financial Statements68
| For the year ended December 31 | |||
| 2018 | 2017 | 2016 | |
| $ millions | $ millions | $ millions | |
| Tax recorded in other comprehensive income | |||
| Actuarial gains from defined benefit plan | (3) | 3 | 8 |
| Change in investments at fair value through other comprehensive income | - | 5 | (5) |
| Taxes in respect of exchange rate differences on equity loan to a subsidiary included in translation adjustment | 2 | (5) | (1) |
| Total | (1) | 3 | 2 |
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 1815 - Taxes on Income (cont'd)
| H. | Taxes on income relating to items recorded in equity |
For the year ended December 31 | |||
2021 | 2020 | 2019 | |
$ millions | $ millions | $ millions | |
Tax recorded in other comprehensive income | |||
Actuarial gains from defined benefit plan | (22) | (6) | 10 |
Change in investments at fair value through other comprehensive income | (21) | 0 | (1) |
Taxes in respect of exchange rate differences on equity loan to a subsidiary included in translation adjustment | (1) | (3) | 1 |
Total | (44) | (9) | 10 |
Note 16 - Employee Benefits
| A. | Composition |
Composition of employee benefits:
As of December 31 | ||
2021 | 2020 | |
$ millions | $ millions | |
Fair value of plan assets | 648 | 629 |
Termination benefits | (135) | (158) |
Defined benefit obligation | (993) | (1,075) |
(480) | (604) |
| As at December 31 | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
| Fair value of plan assets | 518 | 631 |
| Termination benefits | (111) | (142) |
| Defined benefit obligation | (860) | (1,068) |
| (453) | (579) |
Composition of fair value of the plan assets:
As of December 31 | ||
2021 | 2020 | |
$ millions | $ millions | |
| As at December 31 | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
Equity instruments | ||
With quoted market price | 230 | 224 |
Without quoted market price | 50 | 40 |
280 | 264 | |
Debt instruments | ||
With quoted market price | 337 | 334 |
Without quoted market price | 3 | 3 |
340 | 337 | |
Deposits with insurance companies | 28 | 28 |
648 | 629 |
| Equity instruments | ||
| With quoted market price | 200 | 197 |
| Debt instruments | ||
| With quoted market price | 164 | 179 |
| Without quoted market price | 119 | 145 |
| 283 | 324 | |
| Deposits with insurance companies | 35 | 110 |
| 518 | 631 |
ICL Group LimitedConsolidated Financial Statements69
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 1816 - Employee Benefits (cont'd)
| B. | Severance Pay |
| 1. | Israeli companies |
The liabilities relating to employeeCompany has two severance pay rights are coveredplans: one plan according to the provisions of section 14 of the Severance Pay Law, which is accounted for as follows:
Certain subsidiaries outside Israel |
In countries wherein subsidiaries operate that have no law requiring payment of severance pay, the Group companiessubsidiaries have not recorded a provision in the financial statements for possible eventual future severance payments to employees, except in cases where part of the activities of the enterprise is discontinued and, as a result, the employees are dismissed.
Pension and Early Retirement |
(1) | Some of the |
| (2) | Some subsidiaries have |
ICL Group LimitedConsolidated Financial Statements70
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 1816 - Employee Benefits (cont'd)
| D. | Post-employment retirement benefits |
Some of the Company retirees of the Group companies receive, aside from the pension payments from a pension fund, benefits that are primarily holiday gifts and weekends.paid vacations. The companies’company’s liability for these costs accrues during the employment period. The Group companies includeCompany includes in theirits financial statements the projected costs in the post-employment period according to an actuarial calculation.
| E. | Movement in net defined benefit obligation and in its components: |
Fair value of plan assets | Defined benefit obligation | Defined benefit obligation, net | ||||
2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |
$ millions | $ millions | $ millions | $ millions | $ millions | $ millions | |
Balance as of January 1 | 629 | 583 | (1,075) | (1,004) | (446) | (421) |
Income (costs) included in profit or loss: | ||||||
Current service costs | 0 | 0 | (24) | (22) | (24) | (22) |
Interest income (expenses) | 6 | 5 | (14) | (14) | (8) | (9) |
Past service cost | 0 | 0 | 12 | 11 | 12 | 11 |
Effect of movements in exchange rates, net | 8 | 16 | (16) | (34) | (8) | (18) |
Included in other comprehensive income: | ||||||
Actuarial profits (losses) deriving from changes in financial assumptions | 0 | 0 | 68 | (24) | 68 | (24) |
Other actuarial gains | 17 | 9 | 0 | 0 | 17 | 9 |
Change with respect to translation differences, net | (10) | 18 | 21 | (32) | 11 | (14) |
Other movements: | ||||||
Benefits received (paid) | (6) | (6) | 35 | 44 | 29 | 38 |
Employer contribution | 4 | 4 | - | - | 4 | 4 |
Balance as of December 31 | 648 | 629 | (993) | (1,075) | (345) | (446) |
| Fair value of plan assets | Defined benefit obligation | Defined benefit obligation, net | ||||
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |
| $ millions | $ millions | $ millions | $ millions | $ millions | $ millions | |
| Balance as at January 1 | 631 | 552 | (1,068) | (934) | (437) | (382) |
| Income (costs) included in profit or loss: | ||||||
| Current service costs | - | - | (24) | (24) | (24) | (24) |
| Interest income (costs) | 14 | 17 | (26) | (29) | (12) | (12) |
| Past service cost | - | - | 7 | - | 7 | - |
| Effect of movements in exchange rates, net | (17) | 23 | 37 | (39) | 20 | (16) |
| Included in other comprehensive income: | ||||||
| Actuarial gains (losses) deriving from changes in financial assumptions | - | - | 71 | (42) | 71 | (42) |
| Other actuarial gains (losses) | (15) | 25 | - | - | (15) | 25 |
| Change in respect to translation differences, net | (19) | 36 | 21 | (65) | 2 | (29) |
| Other movements: | ||||||
| Benefits paid | (38) | (36) | 73 | 64 | 35 | 28 |
| Conversion to defined contribution plans | (49) | - | 49 | - | - | - |
| Transferred to assets held for sale | - | - | - | 1 | - | 1 |
| Employer contribution | 11 | 14 | - | - | 11 | 14 |
| Balance as at December 31 | 518 | 631 | (860) | (1,068) | (342) | (437) |
The actual return (loss) on plan assets in 20182021, is $(-1)$23 million, comparecompared with $42$14 million in 20172020 and $47$61 million in 2016.2019.
| F. | Actuarial assumptions |
Principal actuarial assumptions as of the reporting date (expressed as weighted averages):
For the year ended December 31 | |||
2021 | 2020 | 2019 | |
% | % | % | |
| For the year ended December 31 | |||
| 2018 | 2017 | 2016 | |
| % | % | % | |
| Discount rate as at December 31 | 3.0 | 2.7 | 2.9 | |||
Discount rate as of December 31 | 2.1 | 1.7 | 2.1 | |||
| Future salary increases | 3.3 | 3.2 | 2.6 | 3.9 | 3.4 | 3.2 |
| Future pension increase | 2.2 | 2.2 | 2.3 | 2.0 | 2.1 | |
ICL Group LimitedConsolidated Financial Statements71
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 16 - Employee Benefits (cont'd)
| G. | Sensitivity analysis |
Assuming all other assumptions remain constant, the following reasonable possible changes affect the defined benefit obligation as of the date of the financial statements in the following manner:
December 2021 | ||||
Decrease 10% | Decrease 5% | Increase 5% | Increase 10% | |
$ millions | $ millions | $ millions | $ millions | |
Significant actuarial assumptions | ||||
Salary increases | (14) | (7) | 7 | 14 |
Discount rate | 20 | 10 | (10) | (20) |
Mortality table | 24 | 12 | (12) | (24) |
The assumptions regarding the future mortality rate are based on published statistics and accepted mortality tables.
| Significant actuarial assumptions | ||||
| Salary increase | 18 | 9 | (9) | (18) |
| Discount rate | (32) | (16) | 16 | 32 |
| Mortality table | (17) | (9) | 9 | 17 |
The expenses recorded in respect of defined contribution plans in 20182021 are $35$43 million (in 2017 and 2016 $372020 $39 million and $38 million, respectively)in 2019 $37 million).
The Company’s estimate ofCompany estimates that the expected deposits expectedin 2021 to be made in 2019 in fundedfund defined benefit plans isare about $10$9 million.
| I. | Long-term incentive plan |
(1) | In February 2022, the Company’s HR & Compensation Committee and the Board of Directors approved a triennial equity grant for the years 2022-2024 in the form of options exercisable to the Company's ordinary shares. For further information - see Note 19. | |
| (2) | In November 2021, Company's HR & Compensation Committee and the Board of Directors approved a new Cash LTI plan, according to which, other senior managers will be awarded a cash incentive in 2024, the fair value of the grant as of the grant date is about $40 million. The grant is subject to achievement of certain financial targets over the three years and can be affected by the change in share price. | |
(3) | In April 2019, Company’s HR & Compensation Committee and the Board of Directors approved a Cash LTI plan, according to which, senior managers will be awarded with a cash incentive of about $32 million to be paid in 2022, subject to compliance with certain financial targets over the three years. As of December 31, 2021, the financial targets were met. |
ICL Group LimitedConsolidated Financial Statements72
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 17 – Provisions
Composition and |
Site restoration and equipment dismantling | Legal claims | Other | Total | |
$ millions | $ millions | $ millions | $ millions |
Balance as of January 1, 2021 | 279 | 10 | 32 | 321 |
Provisions recorded during the year | 24 | 5 | 12 | 41 |
Provisions recorded in respect of business combinations | 0 | 3 | 0 | 3 |
Provisions reversed during the year | 0 | (3) | (1) | (4) |
Payments during the year | (13) | (1) | (2) | (16) |
Translation differences | (7) | (1) | 0 | (8) |
Balance as of December 31, 2021 | 283 | 13 | 41 | 337 |
| (1) | Main items under 'Site restoration and equipment dismantling': |
| a. | Spain – In June 2018, a new restoration plan was approved for the Suria and Sallent sites, which included a plan for handling the salt piles and dismantling of facilities. The restoration plan for the Suria site is scheduled to extend until 2094, and for the Sallent site up to 2075. |
| Balance as at January 1, 2018 | 194 | 28 | 49 | 271 |
| Provisions recorded during the period (1) | 25 | 2 | - | 27 |
| Provisions reversed during the period | (3) | - | (6) | (9) |
| Payments during the period | (6) | (11) | - | (17) |
| Translation differences | (5) | (1) | - | (6) |
| Balance as at December 31, 2018 | 205 | 18 | 43 | 266 |
| b. | Rotem Israel – as of December 31, 2021, according to the Company's estimation, the provision for the restoration of the mining sites and waste repositories, for Rotem Israel's operations, amounted to $89 million. The provision is measured based on the present value of the cash flows, which relies on the Company's estimation of the future expense required for the restoration of the mining sites. The actual costs that may be required may differ, even substantially, from the current provision, as a result of the inherent complexity of such estimation, the Company's future decisions regarding the facilities and regulatory requirements. |
ICL Group LimitedConsolidated Financial Statements73
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 17 – Provisions (cont'd)
| A. | Composition and changes in the provision (cont'd) |
| c. | Bromine Israel (Neot Hovav) – pursuant to the Ministry of Environmental Protection, the Company is required to treat both solid waste of past periods which is stored in a designated defined area on the site's premises, and currently-produced waste created during the ongoing production processes in the plant. Waste treatment is partly conducted through a hydro-bromine acid recovering facility (BRU), operated by the Company. Part of the waste is sent for external designated treatment. As of December 31, 2021, the provision for prior periods waste treatment amounted to about $43 million. In the Company's estimation, based on the information currently available to it, the provision included in its financial statements covers the estimated cost for treating prior periods waste. |
| (1) | In 2016, a court decision was rendered which determined that ICL Iberia bears responsibility for contamination of water in certain wells at the Suria and Sallent sites (due to an over concentration of salt). In 2018, claims were received from several owners of the land surrounding the wells, demanding compensation from ICL Iberia for damages in the aggregate amount of $22 million. In the Company's estimation it is more likely than not that it would be required to compensate the owners in the amount of up to $4 million. The provision in the Company's books reflects this estimate. |
| (2) | In 2017, the Israeli Water Law was amended, according to which saline water of the kind produced for Dead Sea plants by the Company's own water drilling is charged with water fees. The Company objected to the charges relating to water drilling within the concession area, which constitutes about 65% of the total charge, based on various arguments, most notably the provisions of the Concession Law. In October 2021, the Water Authority informed the Company that water fees will not be charged for water production within the concession area. |
In addition, in March 2021, a decision was made by the Water Authority, whereby despite the Company's objection, its definition should be changed to "Consumer-Producer", as defined in the Water Law, starting with the production license for 2021. The main implication of this change is an increase in the water fees of about $3 million per year for water from drillings outside the concession area. The Company filed an appeal with the water court against the said decision and the parties presented their arguments in a preliminary hearing. A hearing procedure is being held, in the framework of which an additional deliberation was scheduled for April 2022.
ICL Group LimitedConsolidated Financial Statements74
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 2018 - Commitments, Concessions and Contingent Liabilities
| A. | Commitments |
| (1) | Several of the Group’s subsidiaries have entered into agreements with suppliers for the purchase of raw materials and energy in the ordinary course of business, for various periods ending on December 31, |
| (2) | Several of the Group’s subsidiaries have entered into agreements with suppliers for the acquisition of property, plant and equipment. As |
| (3) | As part of the collaboration between ICL's subsidiary in Spain (ICL Iberia) and the government of Catalonia to achieve environmental sustainability goals, the Company has undertaken to carry out restoration of the salt piles in its sites, mainly by processing and removing them to the sea via a collector. In |
| (4) | In December 2017, the |
In February 2020, Energean announced a "Force Majeure" under the GSPA and of potential expected delays in the supply of NG. ICL rejected the announcement.
In October 2020, the Company chose to exercise its rights for early termination of its agreements with Tamar and Leviathan reservoirs, and to sign an exclusive agreement with Tamar reservoir to supply the full amount of NG consumed by the Company in the interim period, until full gas supply is obtained from Energean, at a price of about $4 per MMBTU (hereinafter – the Bridge Agreement). The Bridge Agreement is in effect until the end of April 2022, on a firm basis, with an extension option on an interruptible basis until December 31, 2022.
ICL Group LimitedConsolidated Financial Statements75
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2018 - Commitments, Concessions and Contingent Liabilities (cont'd)
A. | Commitments (cont'd) | |
| (4) | (Cont'd) | |
In January 2022, Energean announced that the gas supply is expected to be postponed until the third quarter of 2022, following its previous announcement of postponement until mid‑2022. The Company has reserved all of its rights in relation to Energean's announcements.
In |
The Articles of Association of the Company and its Israeli subsidiaries include provisions that permit exemption, indemnification and insurance of the liability of officers, all in accordance with the provisions of the |
The Company, with the approval of the Audit its HR & Compensation Committee, the Board of Directors and the General Meeting of the shareholders, granted its officers ana letter of exemption and letters of indemnification, and also hasmaintains an insurance policy covering directors' and officers.officers' liability. The directors' and officers' liability insurance and the exemption and indemnity undertaking do not apply to those cases specified in Section 263 of the Israeli Companies Law. The exemption relates to damage caused and/or will be caused, by those officers as a result of a breach of the duty of care to the Company. Regarding directors who are office holders of Israel Corp., who may serve from time to time, on January 5, 2021, the shareholders' general meeting approved the extension of the period for exemption and indemnification entered into with such office holders, for an additional 9 years, commencing November 30, 2020, provided that the exemption shall not apply to liabilities arising in connection with a transaction or resolution in which a controlling shareholder or an office holder, including an office holder who is other than the office holder party to the agreement, has a personal interest.
The amount of the indemnification payable by the Company under the letter of indemnification, in addition to amounts received from an insurance company, if any, for all of the officers on a cumulative basis, for one or more of the events detailed therein, is limited to $350$300 million. The insurance is renewed annually.
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2018 - Commitments, Concessions and Contingent Liabilities (cont'd)
Concessions | ||
| (1) | Dead Sea Works Ltd. (hereinafter – DSW) |
Pursuant to the Israeli Dead Sea Concession Law, 1961 (hereinafter – the Concession Law), as amended in 1986, and the concession deed attached as an addendum to the Concession Law, DSW was granted a concession to utilize the resources of the Dead Sea and to lease the land required for its plants in Sodom for a period that is expected to endending on March 31, 2030, accompanied by a priority right to receive the concession after its expiration, should the Government wishdecide to offer a new concession to a third party.concession.
In accordance with section 24 (a) of the Supplement to the Concession Law, it is stated, among other things, that at the end of the concession period all the tangible assets at the concession area will be transferred to the government, in exchange for their amortized replacement value – the value of the assets as if they are purchased as new at the end of the concession period, less their technical depreciation based on their maintenance condition and the unique characteristics of the Dead Sea area.
Pursuant to section 24 (b) of the Supplement to the Concession Law, it is stated that capital investments made 10 years before the concession ends (i.e., April 2020) to the end of the concession period require a prior consent of the Government, unless they can be fully deducted for tax purposes before the end of the concession period. However, the Government's consent to any fundamental investment that may be necessary for the proper operation of the plant, will not be unreasonably delayed or suspended. In 2020, a work procedure was signed between the Company and the Israeli Government for the purpose of implementing section 24(b). The procedure determines, among other things, the manner of examining new investments and the consent process. In addition, the procedure determines the Company's commitment to invest in fixed assets, including for preservation and infrastructure, and for ongoing maintenance of the facilities in the concession area (for the period beginning in 2026) and the Company's commitment to continue production of potassium chloride and elemental bromine (for the period commencing 2028), all subject to the conditions specified in the procedure. Such commitments do not change the way the Company currently operates. The Company operates with the Israeli Government in accordance with the procedure and obtains investment approvals from time to time as required.
In 2015, the Minister of Finance appointed a team to determine the “governmental activities to be conducted towards the end of the concession period”. The public’s comments in this matter were submitted to an inter-ministerial team.
ICL Group LimitedConsolidated Financial Statements77
Notes to the team. Consolidated Financial Statements as of December 31, 2021
Note 18 - Commitments, Concessions and Contingent Liabilities (cont'd)
| B. | Concessions (cont'd) | |
| (1) | DSW (cont'd) |
Based on the interim report and its recommendations published in May 2018, and following a public hearing, onin 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, sinceSince the report includes guiding principles and a recommendation to establish sub-teamssub‑teams to implement such principles, the Company is unable to assess, at this stage, the concrete implications, manner in whichor if the recommendations wouldwill be implemented in practice, and on which schedules.as well as the relevant timing. In addition, there is no certainty as to how the Government wouldgovernment will interpret the Concession Law and the manner in which this process and methodology would ultimately be implemented.implement processes accordingly.
In addition, in 2015, the Minister of Finance appointed a team headed by the (former) Accountant General to evaluate the manner in which, according to the current concession, the replacement value of DSW’s tangible assets would be calculated, assuming that these assets would be returned to the government at the end of the concession period. The determination date of the actual calculation is only in 2030.at the end of the concession period. As far as the Company is aware, this work has not yet been completed.
The consolidated Financial Statements were prepared under management's belief that it is more likely than not, that DSW will continue to operate the relevant assets for their remaining useful lives, which extends beyond the term of the current concession period, by obtaining the renewed concession or by operating the assets for an alternative holder. The consolidated depreciation expenses in 2021, relating to the assets located within the concession area, amounted to about $86 million.
As part of the preparation process for the Israeli Subsidiaries’ financial statements, DSW, Dead Sea Bromine and Dead Sea Magnesium for 2016 and onward, which serve as a basis for the financial reports prepared pursuant to the provisions of the Taxation of Natural Resources Law (hereinafter – the Law), the Company received an opinion from an independent appraiser regarding the fair value of the property, plant and equipment of the subsidiaries Dead Sea Works, Dead Sea Bromine and Dead Sea Magnesium in Israel (hereinafter – the Subsidiaries). The Opinion was prepared mainly for the Subsidiaries’ financial statements for 2016 and onward, which serve as a basis for the reports filed pursuant to the provisions of the Taxation of Natural Resources Law.fixed assets. The Property, Plant and Equipment value provided in the opinion is based on the Replacement Cost methodology (as used assets) and iswas estimated at about $6 billion, as atof December 31, 2015, and at December 31, 2016.the date the Law entered into effect.
Though the assets assessed for tax purposes and the assets that may be valuated under the Concession Law are highly correlated, there is no complete identity between them. The Company believes that the applied Replacement Cost Methodology used in the opinion for estimating the fair value coincides with the methodology mentioned in the Concession Law for future valuation of the Property, Plant and Equipment upon termination of the concession period. Nevertheless, there could be other interpretations to the manner of implementation of the Concession Law’s provisions or with respect to the valuation methodology, hence,methodology. Therefore, the estimated value with respect to the Concession Law could materially differ from the value provided in the said opinion,Company's estimates, even with respect to the same assets and dates.
ICL Group LimitedConsolidated Financial Statements78
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 18 - Commitments, Concessions and Contingent Liabilities (cont'd)
| B. | Concessions (cont'd) | |
| (1) | DSW (cont'd) |
It is expected that the value of the Property, Plant and Equipment, at the end of the concession period, will change as time passes and as a result of purchase and disposals of assets included in the future valuation.assets.
Royalties
In consideration of the concession, DSW pays royalties to the Government of Israel, calculated at thea rate of 5% of the value of the products at the factoryplant gate, less certain expenses.According to the Salt Harvesting Agreement signed in July 2012 (hereinafter – the SLA), in case the annual quantity of chloride potash sold is in excess of 1.5 million tonnes, the royalties rate would be 10%. In addition, the SLA states that if legislation is enacted that changes the specific fiscal policy in connection with profits or royalties deriving from the mining of quarries from the Dead Sea, the Company’s consent to the increase of the royalties' rate on the surplus quantities referred to above will not apply, after the enactment of the legislation, to the period in which such additional tax is collected as stated in the said legislation.
DSW granted a sub‑concession to Dead Sea Bromine Ltd. (hereinafter –the Bromine Company) to produce bromine and its compounds from the Dead Sea, the expiration date of which is concurrent with the DSW'sDSW concession. The royalties in respect of the products manufactured by theDead Sea Bromine Company are received by DSW, from the Bromine Company, and DSWwhich then pays them over to the State.
| (2) | Rotem Amfert |
Rotem Israel has been mining phosphates in the Negev in Israel for more than sixty years. The mining is conducted in accordance with the phosphate mining concessions, which are granted from time to time by the Minister of National Infrastructures, Energy and Water under the Mines Ordinance, by the Supervisor of Mines in his Office, (hereinafter – the Supervisor), as well as the mining authorizations issued by the Israel Lands Authority (hereinafter – the Authority). The concessions relate to quarries (phosphate rock), whereas the authorizations cover use of land as active mining areas.
Mining Concessions |
Rotem Israel hadtwo mining concessions: (1) Rotem Field (including the Hatrurim Field) and (2) Zafir Field (Oron‑Zin)which were valid until the end of 2021.
In December 2021, the Ministry of Energy granted Rotem hasIsrael an extension to a unified concession (which includes all Rotem's mining fields) for an additional three years, until the followingend of 2024. In order to comply with the concession's provisions, the Company undertook, among other things, to assure that Rotem meets its existing obligations to rehabilitate its mining concessions:and plants areas, according to outlined requirements attached to the new concession, also by means of a bank guarantee in the amount of $19 million.
As part of the Company’s efforts to secure Rotem Israel’s future phosphate rock resources, in January 2022, the Ministry of Energy granted Rotem Israel an exploration license for phosphate in an area of 1,065 dunams, North of the Oron Concession. The license is valid until the end of 2023. The Company intends to carry out the examinations required to establish the existence of minerals in this area.
ICL Group LimitedConsolidated Financial Statements79
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 18 - Commitments, Concessions and Contingent Liabilities (cont'd)
| B. | Concessions (cont'd) | |
| (2) | Rotem Israel (cont'd) |
Lease Agreements |
Mining Royalties
As part of the terms of the concessions in respect of mining of the phosphate, Rotem Israel is required to pay the State of Israel royalties based on a calculation as stipulated in the Israeli Mines Ordinance.
In January 2016, a legislative amendment entered into effect covering implementationaccordance with the Mines Ordinance (Third addendum A), the royalty rate for production of the recommendations of the Sheshinski Committee that changed the formula for the calculation of the royalties, by increasing the rates from 2% to phosphates is 5% of the value of the quarried material and left the Supervisor the possibility of collecting royalties at a higher rate if he decided to grant a mining right in a competitive process wherein onematerial. As part of the selection indicesprocess of extending the concession as detailed above, an order was issued by the Ministry of Energy to amend the Third addendum A which is intended to anchor and clarify the royalty rate.basis for calculating the royalties and its components in the coming years. Following the provision of the order, the Company also aligned its royalties' calculation for prior years, and as a result, recognized an additional amount of $7 million.
Planning and Building |
The mining and quarrying activities require a zoning approval of the site based on a plan in accordance with the Israeli Planning and Building Law, 1965. These plans are updated, as needed, from time to time. As atof the reporting date, of this report, there are various requests at different stages of deliberations pending before the planning authorities.
Zin-Oron area - In November 2016, the District Board for the Southern District approved a detailed site plan for mining phosphatephosphates in the Zin‑Oron area. This plan, which covers an area of about 350 square kilometers, will permit the continued mining of phosphate located in the Zin valley and in the Oron valley for a period of 25 years or up tountil the exhaustion of the raw material – whichever occurs first, with the possibility for extension (under the authority of the District Planning Board).
The Company is working to promote the plan for mining phosphates in Barir field, (which 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,deposit 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 ofadvance a detailed National Outline Plan which was approved by for the Barir field mining site. According to the recommendation of the National Council, the government’s Housing Cabinet in January 2018.approved the National Outline Plan (hereinafter - NOP 14B).
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 regarding the appeal, it was decided, with the consent of the Ministries of Health, Finance and Energy, to remove the appeal and to approve the NOP 14B. 14B, which was formally published later.
ICL Group LimitedConsolidated Financial Statements80
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 18 - Commitments, Concessions and Contingent Liabilities (cont'd)
| B. | Concessions (cont'd) | |
(2) | Rotem Israel (cont'd) |
In addition, it was decided to establish a team with representatives of the ministriesof Treasury, Health, Transportation, Environmental Protection and Energy(hereinafter –The Inter-ministerial team), 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 wasand 2019, petitions were submitted to the Israeli Supreme CourtCourt 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,by 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 inIsrael, to revoke the approval of NOP 14B and to order the National Council to discuss the NOP directives, while giving proper weight to the health risk.
In 2020, the inter-ministerial team reached anoutline agreement regarding the examination of the health aspects of the NOP 14B, which, according to the state, constitutes an appropriate response for the review of potential health hazards on which the petitions focus.
In October 2021, the Israeli Supreme Court was requestedof Justice decided to cancelreject the petitions. The court’s decision followed the National Planning and Building Council's decision, from August 2021, to incorporate the main points of the outline agreement in the provisions of NOP 14B.
In November 2021, the Housing Cabinet, approved once again the amended NOP 14B, andfollowing which, the Minister for Environmental Protection submitted a request for a government review of past decisions, which in accordance with the decision of the National Council from December 5, 2017, regardingMinistry of the Interior will be held within 180 days, prior to promoting the Barir Detailed NOP.
In addition to the advancementprocedures described above, securing the future of a detailed plan forthe phosphate mining in operations at Rotem Israel depends among other things, on 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.following matters:
• | Emissions permit under the Israeli Clean Air Act (hereinafter - the Law): In June 2021, the Company's emission permit was renewed by the Israeli Ministry of Environmental Protection (MoEP), until September 2023. The renewed permit reflects an updated outline of requirements. Postponement in the execution of a limited number of projects was granted within the framework of an administrative order under Section 45 of the Law, received in July 2021. Management still expects difficulties in meeting the execution schedules of a limited number of projects and accordingly continues to work with the MoEP to find a satisfactory solution regarding the timing of the investments, taking into account the impact of uncertainty surrounding Rotem Israel's activity, as far as the implementation of long-term projects is concerned. |
ICL Group LimitedConsolidated Financial Statements81
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2018 - Commitments, Concessions and Contingent Liabilities (cont’d)
(cont'd)
B. | Concessions (cont'd) | |
| (2) | Rotem Israel (cont'd) |
• | Oron's lease agreement - The Company has been working to extend the lease agreement for Oron's plant area since 2017 by exercising the extension option provided in the agreement. | |
• | Phosphogypsum storage - In October 2021, a new Urban Building Plan was approved, the main objectives of which are to regulate areas for phosphogypsum storage reservoirs. According to the new Plan, the Company is required to obtain building permits involving permit fees. Due to the ambiguity of the guidelines regarding the fee's calculation, there is a difficulty in estimating the future required outflows. | |
• | Energy Production – In order to ensure the continuity of energy production in Rotem Israel, and in accordance with the policy of the Ministry of Energy and the Ministry of Environmental Protection, the Company is working to accelerate the completion of a project to replace existing energy production infrastructure at Rotem, which utilizes oil shale, with a natural gas-based steam boiler, so it will be completed before the existing mined reserves of oil shale are utilized. | |
• | Finding economically feasible alternatives for continued mining of phosphate rock in Israel – According to the Company's assessment of economic phosphate reserves in the existing mining areas and the estimated useful life of Rotem's phosphate rock reserves, which are essential for its production, is limited to only a few years. As described above, the Company is working to obtain permits and approvals which will provide an economic alternative for future mining of phosphate rock in Israel. | |
The Company is continuing its discussions with the relevant authorities, in order that the required approvals, permits and future phosphate rock resources are granted. The Company estimates that it is more likely than not that the said approvals, permits and future phosphate rock resources will be granted within a timeframe that 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 resources 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. | ||
ICL Group LimitedConsolidated Financial Statements82
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 18 - Commitments, Concessions and Contingent Liabilities (cont'd)
B. | Concessions (cont'd) |
| (3) | ICL Iberia – a subsidiary in Spain |
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, 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 current and possible future mining activities. Some of the licenses are valid until 2037 and the remainder are effective until 2067. The concession for the "Reserva Catalana", an additional site where mining did not commence, 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. | |||
United Kingdom |
| A. | The |
Regarding ICL Boulby's planning permit for mineral exploitation, which is valid until 2023, in December 2021, the North York Moors Park Authority Planning Committee approved ICL Boulby Mine’s application for the continuation of polyhalite and salt production for an additional 25 years, commencing 2023.
The Company believes, it is more likely than not that it will obtain renewal or ownership of all the needed rights and permits.
With respect to the mining royalties, ICL Boulby pays royalties of 1.5% which in 2021, amounted to $1.4 million.
| B. | A UK subsidiary |
ICL Group LimitedConsolidated Financial Statements83
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 18 - Commitments, Concessions and Contingent Liabilities (cont'd)
| B. | Concessions (cont'd) |
| (5) | YPH - China | |
Mining Concessions |
YPH JV,ICL's subsidiary in China, which is equally owned with Yunnan Phosphate Chemicals Group Corporation Ltd. ("YYTH"), 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),Haikou) which the Company operates and which is valid until January 2043, and (2) a mining license is valid up to January 2043, whereas regardingfor the Baitacun Mine, (hereinafter – Baitacun),which was renewed in 2021, and is valid until 2023. The Company intends to conduct a risk survey toassess the feasibility and profitably of mining license expired in November 2018. The mining activities at Haikou are carried out in accordance with the above‑mentioned license. Regarding Baitacun, the Company is examining the option to renew the concession, subject to the phosphate reserves soil survey results and achieving the required understanding with the authorities.site.
Grant of Mining Rights to Lindu |
In 2016, YPCa subsidiary of YYTH (hereinafter – YPC) issued a statement whereby in 2010 YPCit entered into agreements with the local authority of Jinning County, Yunnan Province and Jinning Lindu Mining Development and Construction Co. Ltd. (hereinafter - Lindu Company), according to which Lindu Company is permitted to mine up to two million tonnestonnes of phosphate rock from a certain area measuring 0.414 square kilometers within the area of the Haikou mine (hereinafter – the Daqing Area) and to sell such phosphate rock to any third party in its own discretion.
Natural Resources Royalties |
Planning and Building |
The production process in YPH requires the Company to operate gypsum and flotation ponds that accumulate phosphogypsum fluid and other materials formed in the production processes. The Company has successfully reached an alignment with the authorities to allow the continuation of its current operations in its ponds until March 2022. YPH is planning to expand its ponds area as part of its ongoing operations plan beyond that date. As of the reporting date, the Company is awaiting the final official certification, which was already obtained verbally in the discussions with the authorities, that will enable the required ponds expansion.
ICL Group LimitedConsolidated Financial Statements84
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2018 - Commitments, Concessions and Contingent Liabilities (cont’d)(cont'd)
| C. | Contingent liabilities | |
| (1) | Ecology |
| A. | In September 2020, an application for a class action was filed in the Beer Sheva District Court in Israel against the Company, the Company's subsidiary Rotem Israel, and certain of the Company's present and past office‑holders by a number of local residents in the Arava region in the south of Israel (hereinafter – the Applicants). The Applicants claim that discharge, leakage and seepage of wastewater from ICL's Zin site allegedly caused various environmental hazards to the Zin stream, which resulted in damage to various groups in Israel’s population, including: the Israeli public whose property is Zin stream; those who avoided visiting Zin stream due to the environmental hazards; visitors of Zin stream who were exposed to the aforementioned hazards and the residents of the area near Zin stream who were affected by the hazards. Accordingly, the Applicants request several remedies, including restitution and compensation for the damage that they claim was caused to the various groups in a minimum amount of NIS 3 billion (approximately $933 million), the majority of which relates to compensation for claimed consequential damages. Following the Applicants’ request for temporary relief, a hearing procedure is being held, in the framework of which the Court ordered to receive a regulator position before giving a final decision. The regulator position is expected to be submitted in March 2022.The Company rejects all the said allegations. Considering the preliminary stage of the proceeding and lack of precedents of such cases in Israel, there is a difficulty in estimating its outcome. No provision has been recorded in the Company's financial statements. |
| B. | In July 2019, an application for approval of a claim as a class action was submitted to the Jerusalem District Court by an Israeli environmental association (hereafter - the Applicant) against 30 defendants, including Fertilizers and Chemicals Ltd., a subsidiary of the Company (hereinafter – the Respondents). The application includes claims relating to air pollution in Haifa Bay (located in northern Israel) and to alleged illness therefrom to the population of the said area. Within the framework of the petition, the Applicant requests declarative relief and the establishment of a mechanism for compensation awards, without specifying their amount, or alternatively, for splitting remedies to allow each group member to sue for damages in a separate proceeding. On January 10, 2022, the Company filed its response objecting to the petition. A hearing procedure is currently being held, in the framework of which a deliberation should take place in the first quarter of 2022. Considering the early stage of the proceeding and the limited precedents of such cases in Israel, there is a difficulty in estimating its outcome. No provision has been recorded in the Company's financial statements. |
ICL Group LimitedConsolidated Financial Statements85
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 18 - Commitments, Concessions and Contingent Liabilities (cont'd)
Contingent liabilities (cont'd) | ||
| (1) | Ecology (cont'd) |
In |
As a result, the Local Committee shall actCourt was requested to enforceorder the lawRespondents to eliminate the proprietary violation in reference to the Aquifer and abstainBokek stream by restoration thereof and to pay the public compensation in an estimated amount of NIS 1.4 billion (about $435 million).
In July 2019, the Respondents filed their response, together with three expert opinions, in which they denied all the Applicant's claims. In 2021, the petitioners notified the Court of their decision to cease the mediation process, which was initiated at the end of 2020. Following the petitioners request, the Court's proceedings were renewed. Considering the early stage of the proceedings, the limited precedents of such cases in Israel and due to preliminary issues that arise from further planning procedures and permits until such enforcement actions are taken.the request, there is a difficulty in estimating their outcome. No provision has been recorded in the Company's financial statements.
| In July and August 2017, three applications for certification of claims as class actions were filed against the Company, as a result of a partial collapse of the dyke in |
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2018 - Commitments, Concessions and Contingent Liabilities (cont’d)(cont'd)
| C. | Contingent liabilities (cont'd) | |
| (1) | Ecology (cont'd) |
In May 2018, the Nature and Parks Authority (hereinafter – NPA), filed an application for certification of a class action against the Company, Rotem Amfert Israel and past and present officers of the Company and Rotem Amfert Israel (jointly hereinafter - the Respondents), with respect to the Ashalim incident. According to the NPA, the Respondents, jointly and/or severally, are liable for compensation due to the Ashalim incident, among other things by virtue of torts lawthe Torts Ordinance and/or unjust enrichment lawprofits and by virtue of any other law. In the Application, the Court was requested, among other things, to issue orders, the purpose of which is to take all necessary measures to prevent the recurrence of the environmental hazard, and also to cooperate with the NPA and the State's authorities in order to minimize the ecological and environmental damage and seein order to allow for the restoration of the nature reserve. Furthermore, the Court was requested to grant monetary relief to the public injured by the ecological and environmental damage, and to grant a monetary relief for the purpose of the restoration of the nature reserve, in the aggregate amount of NIS 397 million (about $106$123 million).
In Octoberconjunction with the aforesaid application, the NPA filed a motion to strike the three applications mentioned above and to prefer the approval application on its behalf, as it argues that it is the most suitable to serve as the representative plaintiff in a class action in this regard, as its application is detailed and well-established as well as the special status conferred upon it under the Class Actions Law, which allows for specific benefits.
ICL Group LimitedConsolidated Financial Statements87
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 18 - Commitments, Concessions and Contingent Liabilities (cont'd)
| C. | Contingent liabilities (cont'd) | |
| (1) | Ecology (cont'd) |
| D. | (Cont'd) |
In November 2018, the Company was notified that all four applicants had agreed to join efforts and manage the class actions in a joint and coordinated manner. Consequently, in November 2018, the parties have informed the Courtmanner, as well as of their consent to take part in a mediation process in an attempt to resolve the disputes outside of court. In February 2019,January 2020, the parties signed a procedural agreement that regulates the procedure by which the disputes will be addressed in the mediation process wasprocedure which has been initiated. As at the reporting date, consideringConsidering the early stage of the proceedings, there is a difficulty in estimating their outcome.
The Company is in contact with its insurance carriers to activate the relevant insurance policies. No provision has been recorded in the Company's financial statements.
In May 2018, the Company was served with a motion for discovery and perusalpursual of documents (hereinafter – the Motion), filed with the Tel Aviv District Court, by a shareholder of the Company (hereinafter – the Movant), as a preliminary proceeding in preparation for the possible filing of an application for certification of a multiple derivative action against officers of the Company and Rotem Israel who, according to the Movant, caused the alleged damages incurred and to be incurred by the Company as a result of the Ashalim incident. In August 2018, the Company submitted its position to the Court. In December 2018, the parties reached an arrangement, according to which, the said legal proceedings will be helddelayed until the relevant investigation's materials will beare provided to Rotem.
the Company by the investigating authority. As of the reporting date, such investigative materials have not yet been received. Considering the proceedings are in an early stage and even suspended, there is a difficulty in estimating their outcome.
In |
| F. | In December 2021, the Company, along with the State of Israel, received a letter of warning prior to pursuing legal action, by Kibbutz Mitzpe Shalem in Israel, claiming, among others, that they were allegedly responsible for the closure of Mineral Beach in January 2015, as a result of a sinkhole. The Kibbutz claims alleged damages of $27 million and |
The Company operates in accordance with industrial wastewater, and in doing so the Respondents have violated various provisions of property law and environmental protection law, including the provisions of the Concession Law for Preventionand permits issued by the local Authorities. The Company rejects all of Environmental Hazards and the Water Law, as well as violations relatingallegations against it by the Kibbutz. Considering the preliminary stage of the proceeding it is difficult to the Torts Ordinance – breach of statutory duty, negligence and unjust enrichment.estimate its outcome.
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2018 - Commitments, Concessions and Contingent Liabilities (cont’d)(cont'd)
Contingent liabilities (cont'd) | ||
| (2) | Increase in the level of the evaporation Pond in Sodom (hereinafter – Pond 5) |
The minerals from the Dead Sea are extracted by way of solar evaporation, whereby salt precipitates onto the bed of one of the evaporation ponds at Sodom (Pond 5),Pond 5, located in one of the sites of Dead Sea Works (hereinafter – DSW).DSW. The precipitated salt creates a layer on the Pond 5 bed with a volume of approximately 2016 million tonnes annually. cubic meters per year.
The production process of production of the raw material requires that a fixed brine volume is preserved in the Pond.Pond 5. Failure to maintain a constant volume of brine in Pond 5 could result in a reduction in production capacity. To this end, up to the solutionsend of 2021, the raising of the brines' level of the Pond is raised each year5 was according to the rate at which the poolpond floor rises.
Raising the water level of the Pond 5 above a certain level is likely tomay cause structural damage to the foundations and theof hotel buildings situated close to the water’s edge, to the settlement of Neve Zohar and to other infrastructuresinfrastructure located along the western shoreline of the Pond. This situation requires establishment
Until the end of defenses for2020, in order to ensure that Pond 5 water level does not exceed the facilities and infrastructuresmaximum height (15.1 meters), the Government of Israel, through the hotels located on the shores of the Pond.
The current brine level is 14.6 meters. Nevertheless, there is additional ongoing work on raising"Permanent Solution", which should provide a defense at least until the roads level along pond 5.
water level above 15.1 meters.
The Company will bearbears 80% and the Government will bearState of Israel bears 20% of the cost of the Salt Harvesting Project, howeverProject. However, the Government'sState's share will not exceed NIS 1.4 billion.
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 basinNorthern 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 P-9 pumping station is expected to commence its operations during 2020. For further information see item A above relating commitments.
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2018 - Commitments, Concessions and Contingent Liabilities (cont’d)(cont'd)
Contingent liabilities (cont'd) | ||
| (2) | Increase in the level of Pond 5 (cont'd) |
A salt dredger, which is part of the implementation of the Salt Harvesting Project, commenced operations in the fourth quarter of 2020 and allowed DSW to establish the pond level below its maximum height at the end of 2021. The P-9 pumping station commenced operation in early 2022.
Spain |
| A. | A subsidiary in Spain (hereinafter – ICL Iberia) |
In addition, since 2018, ICL Iberia received theprepared an environmental impact assessment, as well as new urban license.
| B. | Following an arbitration proceeding conducted between a Spanish subsidiary (IBP) and Nobian concerning the termination of a partnership agreement between them, in October 2021 an agreement was signed to terminate the partnership, under which the Company will pay a net amount of approximately $17 million for Nobian's holding in Sal Vesta (51%), Nobian’s share in a joint venture (SOPAA) and for the net settlement of all additional disputes between the parties. |
ICL Group LimitedConsolidated Financial Statements90
Notes to 2094, whereas for the Sallent site up to 2070. In June 2018, the new restoration plan was approved.Consolidated Financial Statements as of December 31, 2021
| C. | Contingent liabilities (cont'd) |
The Company rejects the claims made in the application and, accordingly, in September 2021 filed its response within the framework of the legal proceeding. Considering the preliminary stage of the proceeding there is a difficulty in estimating its outcome. No provision has been recorded in the Company's | ||
| (5) | In connection with the |
In March 2019, IBM filed its statement of defense, together with a counterclaim against the Company, according to which IBM claims that ICL allegedly refrained from making certain payments, conducted negotiations in bad faith, and terminated the project unilaterally, in a way that harmed IBM's reputation and goodwill and therefore claims an amount of about $53 million (about ILS 170 million), including VAT and interest. In June 2019, the Company filed a statement of defense with respect to the counterclaim in which the Company rejected all of IBM's claims. In January 2021, IBM filed a request for dismissal including the deletion of the remedies claimed by the Company arising from the termination of the agreement between the parties. In August 2021, the Company filed a request to delete IBM's statements of claim, on the grounds that IBM acted in order to delay, burden and disrupt a professional expert's work, and thus to impair the documents discovery process. Considering the early stage of the proceedings and the complexity of the claims, it is difficult to estimate their outcome. Nevertheless, the Company believes it is more likely than not that IBM's claims in its counterclaim will be rejected.
ICL Group LimitedConsolidated Financial Statements91
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 18 - Commitments, Concessions and Contingent Liabilities (cont'd)
| C. | Contingent liabilities (cont'd) |
In December 2018, an application for certification of a class action was filed with the Tel Aviv District Court against the Company, Israel Corporation, and office holders, including directors who held office during the said dates which are stated in the application, with respect to the manner in which the IT (the Harmonization) project was managed and terminated. According to the allegations made in the Application, the Company failed to properly report negative developments which occurred on certain dates during the said IT project, The represented class was defined in the application as all those who acquired the Company's shares at any time during the period commencing June 11, 2015 and did not sell them until September 29, 2016 (hereinafter – the Applicants). |
In January 2020, the Company filed an application, which was accepted in court, to postpone the proceedings until a verdict is received in its lawsuit against IBM (see item 5 above). The delay was accepted subject to the Company's on-going updates regarding the IBM proceeding. In April 2020, the Applicants filed a request with the Supreme Court for leave to appeal the said Court's decision. In July 2021, the Tel Aviv District Court ruled that the Applicants may file a reply as required by law. Consideringwell as an application for disclosure of documents, and that in November 2021, instructions will be given regarding the early stagecontinuation of the proceedings. Following this decision, the Applicants requested that the Supreme Court suspend the decision of the application to appeal, in relation to the District Court's ruling to delay the proceedings, until it receives its instructions regarding their continuation. In August 2021, the Supreme Court denied the petitioners' request for leave to appeal. In addition, in September 2021, the Applicants filed a motion for disclosure of documents to the Tel Aviv District Court. On February 13, 2022, a hearing was held, following which, the court issued interim orders regarding the discovery proceedings. Considering the proceedings are in early stages and even suspended, there is a difficulty in estimating the chances the application will be accepted.
In July 2018, an application for certification of a class action was filed with the Central District Court against the Company and its subsidiaries, Rotem |
The represented group includes all the consumers who purchased, directly or indirectly, solid phosphate fertilizer products manufactured by the Defendants, or farming produce fertilized with solid phosphate fertilizer or food products that include such farming produce as stated above, in the years 2011-2018 (hereinafter – the Represented Group).
ICL Group LimitedConsolidated Financial Statements92
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 18 - Commitments, Concessions and Contingent Liabilities (cont'd)
| C. | Contingent liabilities (cont'd) | |
| (7) | (cont'd) |
According to the statement of claim, the plaintiff requests, among other things, that the Court rules in his favor and in favor of the Represented Group, awarding them compensation for the damages allegedly caused to them, in the total amount of NIS 56 million (about
In addition to the contingent liabilities, as stated above, as |
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2119 – Equity
| A. | Composition: |
As | As | |||
Authorized | Issued and paid | Authorized | Issued and paid | |
| Number of Ordinary shares of Israeli Shekel 1 par value (in millions) | 1,485 | * 1,305 | 1,485 | * 1,303 |
| Number of Special State share of Israeli Shekel 1 par value | 1 | 1 | 1 | 1 |
Number of ordinary shares of Israeli Shekel 1 par value (in millions) | 1,485 | 1,312 | 1,485 | 1,305 |
Number of Special State shares of Israeli Shekel 1 par value | 1 | 1 | 1 | 1 |
(*) For information regarding the amount of treasury shares, see Note 21.G.19.G.(1).
The reconciliation of the number of shares outstanding at the beginning and at the end of the year is as follows:
Number of Outstanding Shares (in millions) |
As of January 1, 2020 | 1,305 |
Issuance of shares | 0 |
As of December 31, 2020 | 1,305 |
Issuance of shares | 7 |
As of December 31, 2021 | 1,312 |
| B. | Rights conferred by the shares |
(1) | The ordinary shares |
The Special State of Israel Share, held by the State of Israel |
| - | Sale or transfer of |
| - | Voluntary liquidation, change or reorganization of the organizational structure of ICL or merger (excluding mergers of entities controlled by ICL, directly or indirectly, that would not impair the rights or power of the Government, as holder of the Special State Share). |
| - | Any acquisition or holding of 14% or more of the issued share capital of ICL. |
| - | The acquisition or holding of 25% or more of the issued share capital of ICL (including augmentation of an existing holding up to 25%), even if there was previously an understanding regarding a holding of less than 25%. |
ICL Group LimitedConsolidated Financial Statements94
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 19 – Equity (Cont'd)
| B. | Rights conferred by the shares (cont'd) |
| - | Any percentage of holding of the Company’s shares, which |
During the second half of 2018, an inter-ministerialinter-ministry team was set up,established, headed by the Ministry of Finance, whose purpose is, among other things, to regulate the authority and supervision in respect of the Special State of Israel Share, as well as reduce the regulatory burden. As atIn 2019, the datework of this team was suspended until further notice due to the dissolution of the report, theKnesset and lack of permanent Government. The Company is unable to estimate when or whether the team will recommence and what are the implications of this process over the Company.Company, if any.
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2119 – Equity (cont'd)
Share-based payments |
1. | Non-marketable options |
| Grant date | Employees entitled | Number of instruments (thousands) | Instrument terms | Vesting conditions | Expiration date |
August 6, 2014 | Officers and senior employees | 3,993 | An issuance of non-marketable and non-transferrable options, for no consideration, under the amended 2014 Equity Compensation | Upon exercise, each option may be converted into one ordinary share of NIS 1 par value of the Company. In case | 3 equal tranches: (1) (2) (3) | Two years from the vesting date. |
June 30, 2016 | ||||||
Officers and senior employees | 3,035 | Upon exercise, each option may be converted into one ordinary share of NIS 1 par value of the Company. | 3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date | June 30, 2023 | ||
September 5, 2016 | Former chairman of BOD | 186 | ||||
February 14, 2017 | Former CEO | 114 | February 14, 2024 | |||
June 20, 2017 | Officers and senior employees | 6,868 | June 20, 2024 | |||
August 2, 2017 | Former chairman of BOD | 165 | ||||
March 6, 2018 | Officers and senior employees | 5,554 | March 6, 2025 |
ICL Group LimitedConsolidated Financial Statements96
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 19 – Equity (cont'd)
| C. | Share-based payments (cont'd) |
| | ||
| 1. | Non-marketable options (cont'd) |
| Grant date | Employees entitled | Number of instruments (thousands) | Issuance’s details | Instrument terms | Vesting conditions | Expiration date |
May 14, 2018 | CEO | 385 | An issuance of non-marketable and non-transferrable options, for no consideration, under the amended 2014 Equity Compensation Plan. | |||
| Upon exercise, each option may be converted into one ordinary share of NIS 1 par value of the Company. | 3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date | |||||
May 14, 2025 | ||||||
August 20, 2018 | Former chairman of BOD | 403 | August 20, 2025 | |||
April 15, 2019 | Officers and senior manager | 13,242 | 2 equal tranches: (1) half at the end of 24 months after the grant date. (2) half at the end of 36 months after the grant date. | 5 years after the grant date | ||
June 27, 2019 | CEO | 3,512 | ||||
May 29, 2019 * | Chairman of BOD | |||||
June 30, 2021 | Senior employees | 647 |
* The options were issued upon Mr. Doppelt’s entry into office on July 1, 2019. |
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 19 – Equity (cont'd)
| C. | Share-based payments (cont'd) |
| 1. | Non-marketable options (cont'd) |
The options issued to the employees in Israel are covered by the provisions of Section 102 of the Israeli Income Tax Ordinance. The issuance will beis performed through a trustee under the Capital Gains Track. The exercise price is linked to the known CPI that is known as of the date of payment, which is the exercise date. In a casethe event that the Company of distribution ofdistributes a dividend, by the Company, the exercise price is reduced on the “ex dividend” date, by the amount of the dividend per share (gross), based on the amount thereof in NIS onthereof at the effective date.
The fair value of the options granted in 2014, as part of 2014 amended equity compensation plan, was estimated using the binomial model for pricing options. The grants in 2015, 2016 2017until 2019 and 20182021 under the amended 2014 Equity Compensation Plan, were estimated using the Black & Scholes model for pricing options. The parameters used in applying the models are as follows:
2014 Plan | |||||||||||
Granted 2014 | Granted 2016 | Granted 2017 | Granted 2018 | Granted 2019 | Granted 2021 | ||||||
| Share price (in $) | 8.2 | 7.0 | 3.9 | 4.5 | 4.4 | 8.2 | 3.9 | 4.5 | 4.4 | 5.4 | 6.8 |
| CPI-linked exercise price (in $) | 8.4 | 7.2 | 4.3 | 4.3 | 4.3 | 8.4 | 4.3 | 5.3 | 7.1 | ||
| Expected volatility: | |||||||||||
| First tranche | 29.40% | 25.40% | 30.51% | 31.88% | 28.86% | 29.40% | 30.51% | 31.88% | 28.86% | 27.85% | 31.70% |
| Second tranche | 31.20% | 25.40% | 30.51% | 31.88% | 28.86% | 31.20% | 30.51% | 31.88% | 28.86% | 27.85% | 31.70% |
| Third tranche | 40.80% | 28.80% | 30.51% | 31.88% | 28.86% | 40.80% | 30.51% | 31.88% | 28.86% | 0 | 0 |
| Expected life of options (in years): | |||||||||||
| First tranche | 4.3 | 3.0 | 7.0 | 7.0 | 7.0 | 4.3 | 7.0 | 4.4 | 4.4 | ||
| Second tranche | 5.3 | 3.0 | 7.0 | 7.0 | 7.0 | 5.3 | 7.0 | 4.4 | 4.4 | ||
| Third tranche | 6.3 | 4.0 | 7.0 | 7.0 | 7.0 | 6.3 | 7.0 | 0 | 0 | ||
| Risk-free interest rate: | |||||||||||
| First tranche | (0.17)% | (1.00)% | 0.01% | 0.37% | 0.03% | (0.17)% | 0.01% | 0.37% | 0.03% | (0.67)% | 0.43% |
| Second tranche | 0.05% | (1.00)% | 0.01% | 0.37% | 0.03% | 0.05% | 0.01% | 0.37% | 0.03% | (0.67)% | 0.43% |
| Third tranche | 0.24% | (0.88)% | 0.01% | 0.37% | 0.03% | 0.24% | 0.01% | 0.37% | 0.03% | 0 | 0 |
| Fair value (in $ millions) | 8.4 | 9.0 | 4.0 | 11.3 | 8.8 | 8.4 | 4.0 | 11.3 | 8.8 | 7.5 | 0.6 |
| Weighted average grant date fair value per option (in $) | 1.9 | 1.2 | 1.1 | 1.6 | 1.4 | 1.9 | 1.1 | 1.6 | 1.4 | 1.2 | 1.3 |
ICL Group LimitedConsolidated Financial Statements98
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2119 – Equity (cont'd)
Share-based payments (cont'd) | ||
| 1. | Non-marketable options (cont'd) |
The expected volatility was determined based on the basis of the historical volatility in the Company’s share prices in the Tel-Aviv Stock Exchange.
The expected life of the options was determined on the basis ofaccording to Management’s estimate of the period in which the employees will hold the options, taking into consideration their position with the Company and the Company’s past experience regarding the turnover of employees.
The risk‑free interest rate was determined based on the basis of the yield to maturity of shekel‑denominated Israeli Government debentures, with a remaining life equal or similar to the anticipated life of the option.
The cost of the benefit embedded in the options and shares from the amended Equity Compensation Plan 2014 is recognized in the statement of income over the vesting period of each portion. Accordingly, in 2018, 2017,2021, 2020, and 2016,2019, the Company recorded expenses of $19$6 million, $16$8 million and $15$12 million, respectively.
The movement in the options during 2018 and 2017 are as follows:
Number of options | |
(in millions) |
Balance as of January 1, 2020 | 30 |
Movement in 2020: | |
Expired during the year | (2) |
Exercised during the year | (1) |
Total options outstanding as of December 31, 2020 | 27 |
Movement in 2021: | |
Granted during the year | 1 |
Exercised during the year | (16) |
Total options outstanding as of December 31, 2021 | 12 |
In February 2022, the Company’s HR & Compensation Committee and the Board of Directors, approved a new triennial equity grant for the years 2022-2024 in | ||
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2119 – Equity (cont'd)
| C. | Share-based payments (cont'd) |
| 1. | Non-marketable options (cont'd) |
The exercise prices for options outstanding at the beginning and end of each period are as follows:
December 31, | December 31, | December 31, |
| Granted 2014 US Dollar | 6.77 | 7.43 | 6.81 | 0 | 0 | 7.15 |
| Granted 2015 US Dollar | 6.92 | 7.59 | 6.95 | |||
| Granted 2016 US Dollar | 4.21 | 4.68 | 4.35 | 4.61 | 4.56 | 4.36 |
| Granted 2017 US Dollar | 3.89 | 4.35 | - | 4.19 | 4.17 | 4.01 |
| Granted 2018 US Dollar | 3.89 | - | 4.11 | 4.12 | 3.99 | |
Granted 2019 US Dollar | 5.77 | 5.66 | 5.42 | |||
Granted 2021 US Dollar | 7.39 | 0 | 0 | |||
The number of outstanding vested options at the end of each period and the weighted average of the exercise price for these options are as follows (*):
December 31, | December 31, | December 31, |
| Number of options exercisable (In Millions) | 11 | 12 | 10 | |||
Number of options exercisable (in Millions) | 4 | 11 | 12 | |||
| Weighted average exercise price in Israeli Shekel | 18.53 | 22.56 | 30.49 | 14.29 | 13.89 | 15.19 |
| Weighted average exercise price in US Dollar | 4.94 | 6.51 | 7.93 | 4.59 | 4.32 | 4.40 |
(*) The share price as of December 31, 20182021, is NIS 21.2030.01 and $5.66.$9.65.
The range of exercise prices for the options outstanding vested at the end of each period areis as follows:
December 31, | December 31, | December 31, |
Range of exercise price in Israeli Shekel | 12.77-18.06 | 13.15-18.32 | 13.55-24.71 |
Range of exercise price in US Dollar | 4.11-5.81 | 4.09-5.70 | 3.92-7.15 |
The average remaining contractual life for the outstanding vested options at the end of each period areis as follows:
December 31, 2021 | December 31, 2020 | December 31, 2019 | |
Average remaining contractual life | 2.83 | 3.58 | 3.85 |
ICL Group LimitedConsolidated Financial Statements as at December 31, 2018
| August 6, 2014 | Officers and senior employees | 922 | 3 equal tranches: (1) One third on December 1, 2016 (2) One third on December 1, 2017 (3) One third on December 1, 2018 | An issuance for no consideration, under the 2014 Equity Compensation Plan, to 450 ICL officers and senior employees in Israel and overseas. | The value of the restricted shares was determined according to the closing price on the TASE on the most recent trading day preceding the grant date (the date approval of the BOD and/or the date of the approval of the General Meeting where required). | 8.4 |
| December 11, 2014 | Former CEO | 86 | An issuance for no consideration, under the 2014 Equity Compensation Plan. | |||
| February 26, 2015 | ICL’s Directors (excluding ICL's CEO) | 99 | 3 tranches: (1) 50% will vest August 28, 2015 (2) 25% will vest February 26, 2017 (3) 25% will vest February 26, 2018 | An issuance for no consideration, under the 2014 Equity Compensation Plan, to 11 ICL Directors. | 0.7 | |
| May 12, 2015 | Officers and senior employees | 1,194 | 3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date | An issuance for no consideration, under the 2014 Equity Compensation Plan, to 550 ICL officers and senior employees in Israel and overseas. | 9.7 | |
| June 29, 2015 | Former CEO | 90 | An issuance for no consideration, under the 2014 Equity Compensation Plan. | |||
| Former Chairman of the BOD | 68 | |||||
| December 23, 2015 | ICL’s Directors (excluding ICL's CEO & Chairman of the BOD) | 121 | 3 equal tranches: (1) One third on December 23, 2016 (2) One third on December 23, 2017 (3) One third on December 23, 2018 | An issuance for no consideration, under the 2014 Equity Compensation Plan, to 8 ICL Directors. | 0.5 |
| June 30, 2016 | Officers and senior employees | 990 | 3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date | An issuance for no consideration, under the 2014 Equity Compensation Plan, to 90 ICL officers and senior employees in Israel and overseas. | The value of the restricted shares was determined according to the closing price on the TASE on the most recent trading day preceding the grant date (the date approval of the BOD and/or the date of the approval of the General Meeting where required). | 4.8 |
| September 5, 2016 | Chairman of the BOD | 55 | An issuance for no consideration, under the 2014 Equity Compensation Plan. | |||
| Former CEO | 185 | |||||
| January 3, 2017 | ICL’s Directors (excluding ICL's Chairman of the BOD) | 146 | An issuance for no consideration, under the 2014 Equity Compensation Plan, to 8 ICL Directors. The value includes a reduction of 5% from the value of the equity compensation, pursuant to the decision of the directors in March 2016, to reduce their annual compensation for 2016 and 2017. | 0.6 | ||
| February 14, 2017 | Former CEO | 38 | An issuance for no consideration, under the 2014 Equity Compensation Plan. | 0.2 | ||
| June 20, 2017 | Officers and Senior employees | 2,211 | An issuance for no consideration, under the 2014 Equity Compensation Plan, to 494 ICL officers and senior employees in Israel and overseas. | 10 | ||
| August 2, 2017 | Chairman of BOD | 53 | An issuance for no consideration, under the 2014 Equity Compensation Plan. | 0.3 | ||
| January 10, 2018 | ICL’s Directors (excluding ICL's CEO & Chairman of the BOD) | 137 | An issuance for no consideration, under the 2014 Equity Compensation Plan, to 7 ICL Directors. | 0.6 |
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2119 – Equity (cont'd)
| C. | Share-based payments (cont'd) |
| 2. | Restricted shares |
| Grant date | Employees entitled | Number of instruments (thousands) | Vesting conditions (*) | Instrument terms | Additional Information | Fair value at the grant date (Million) |
June 30, 2016 | Officers and senior employees | 990 | 3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date | An issuance for no consideration, under the amended 2014 Equity Compensation Plan. | The value of the restricted shares was determined according to the closing price on the TASE on the most recent trading day preceding the grant date (the approval date of the BOD and/or the approval date of the General Meeting where required). | 4.1 |
September 5, 2016 | Former chairman of BOD | 55 | ||||
June 20, 2017 | Officers and senior employees | 2,211 | 10 | |||
August 2, 2017 | Former chairman of BOD | 53 | 0.3 | |||
January 10, 2018 | ICL’s Directors (excluding ICL’s CEO & Chairman of the BOD) | 137 | 0.6 | |||
March 6, 2018 | Officers and senior employees | 1,726 | 8 | |||
May 14, 2018 | CEO | 121 | 0.6 | |||
August 20, 2018 | Former chairman of BOD | 47 | 0.2 | |||
April 23, 2020 | ICL’s Directors (excluding directors who are officers or directors of Israel Corporation Ltd.) | 177 | 3 equal tranches: (1) one third on January 1, 2021 (2) one third on January 1, 2022 (3) one third on January 1,2023 | The value of the restricted shares was determined according to the closing price on the TASE on the most recent trading day preceding the Grant Date (the approval date of the annual General Meeting of shareholders). | 0.6 |
(*) | Vesting of the Restricted |
| March 6, 2018 | Officers and senior employees | 1,726 | 3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date | An issuance for no consideration, under the 2014 Equity Compensation Plan (as amended). | The value of the restricted shares was determined according to the closing price on the TASE on the most recent trading day preceding the grant date (the date approval of the BOD and/or the date of the approval of the General Meeting where required). | 8 |
| May 14, 2018 | CEO | 121 | 0.6 | |||
| August 20, 2018 | Chairman of BOD | 47 | 0.2 | |||
| ICL’s Directors (excluding ICL's CEO & Chairman of the BOD) | 88 | Acceleration at January 2019. | 0.4 |
ICL Group LimitedConsolidated Financial Statements101
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2119 – Equity (cont’d)(cont'd)
| D. | Dividends distributed to the Company’s Shareholders |
The date of Board of Directors’ decision to distribute the dividend | Actual date of distribution of the dividend | Gross amount of the dividend distributed (in millions of $) | Net amount of the distribution (net of the subsidiary’s share) (in millions of $) | Amount of the dividend per share (in $) |
February 4, 2019 | March 13, 2019 | 62 | 61 | 0.05 |
May 6, 2019 | June 19, 2019 | 76 | 75 | 0.06 |
July 30, 2019 | September 24, 2019 | 74 | 73 | 0.06 |
November 5, 2019 | December 18, 2019 | 65 | 64 | 0.05 |
Total 2019 | 277 | 273 | 0.22 | |
February 11, 2020 | March 18, 2020 | 23 | 23 | 0.02 |
May 10, 2020 | June 17, 2020 | 30 | 30 | 0.02 |
July 27, 2020 | September 16, 2020 | 36 | 36 | 0.03 |
November 10, 2020 | December 16, 2020 | 29 | 29 | 0.02 |
Total 2020 | 118 | 118 | 0.09 | |
February 10, 2021 | March 16, 2021 | 34 | 34 | 0.03 |
May 5, 2021 | June 16, 2021 | 67 | 67 | 0.05 |
July 27, 2021 | September 1, 2021 | 68 | 68 | 0.05 |
November 3, 2021 | December 15, 2021 | 107 | 107 | 0.08 |
Total 2021 | 276 | 276 | 0.21 | |
February 8, 2022* | March 8, 2022 | 169 | 169 | 0.13 |
| March 15, 2016 | April 18, 2016 | 67 | 67 | 0.05 |
| May 17, 2016 | June 22, 2016 | 35 | 35 | 0.03 |
| August 9, 2016 | September 27, 2016 | 60 | 60 | 0.05 |
| November 22, 2016 | January 4, 2017 | 60 | 60 | 0.05 |
| February 14, 2017 | April 4, 2017 | 57 | 57 | 0.04 |
| May 9, 2017 | June 20, 2017 | 34 | 32 | 0.03 |
| August 2, 2017 | September 13, 2017 | 32 | 32 | 0.02 |
| November 7, 2017 | December 20, 2017 | 57 | 56 | 0.04 |
| February 13, 2018 | March 14, 2018 | 70 | 69 | 0.05 |
| May 10, 2018 | June 20, 2018 | 52 | 51 | 0.04 |
| July 31, 2018 | September 4, 2018 | 56 | 56 | 0.04 |
| October 31, 2018 | December 19, 2018 | 66 | 65 | 0.05 |
| February 5, 2019 (after the reporting date)* | March 13, 2019 | 62 | 61 | 0.05 |
(*) The record date is February 28, 201923, 2022, and the payment date is March 13, 2019.8, 2022.
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 19 – Equity (cont'd)
| E. | Cumulative translation adjustment |
The translation reserve includes all translation differences arising from translation of financial statements of foreign operations.
| F. | Capital reserves |
The capital reserves include expenses for share‑based compensation to employees against a corresponding increase in equity (see section C.(See item C above) and change in investment at fair value through other comprehensive income (investment in 15% of the share capital of YYTH, see(See Note 23.B)21.E(3)).
| G. | Treasury shares |
During 2008 and 2009 22.4 million shares were acquired by the |
Note 18.E) and dividends to the shareholders.
| For the year ended December 31 | |||
| 2018 | 2017 | 2016 | |
| $ millions | $ millions | $ millions | |
| Sales | 5,556 | 5,418 | 5,363 |
| Cost of sales | |||
| Materials | 1,643 | 1,504 | 1,546 |
| Cost of labor | 791 | 777 | 753 |
| Depreciation and amortization | 384 | 363 | 317 |
| Energy | 349 | 343 | 315 |
| Other | 535 | 759 | 772 |
| 3,702 | 3,746 | 3,703 |
For the year ended December 31 | |||
2021 | 2020 | 2019 | |
$ millions | $ millions | $ millions | |
Sales | 6,955 | 5,043 | 5,271 |
Cost of sales | |||
Materials consumed | 2,342 | 1,647 | 1,702 |
Cost of labor | 906 | 794 | 766 |
Depreciation and amortization | 413 | 416 | 384 |
Energy and fuel | 343 | 316 | 340 |
Other | 340 | 380 | 262 |
4,344 | 3,553 | 3,454 |
ICL Group LimitedConsolidated Financial Statements as at December 31, 2018
| For the year ended December 31 | |||
| 2018 | 2017 | 2016 | |
| $ millions | $ millions | $ millions | |
| Selling, transport and marketing expenses | |||
| Transport | 553 | 497 | 475 |
| Cost of labor | 125 | 122 | 119 |
| Other | 120 | 127 | 128 |
| 798 | 746 | 722 | |
| General and administrative expenses | |||
| Cost of labor | 172 | 170 | 188 |
| Professional Services | 44 | 49 | 77 |
| Other | 41 | 42 | 56 |
| 257 | 261 | 321 | |
| Research and development expenses, net | |||
| Cost of labor | 38 | 40 | 48 |
| Other | 17 | 15 | 25 |
| 55 | 55 | 73 |
| For the year ended December 31 | |||
| 2018 | 2017 | 2016 | |
| $ millions | $ millions | $ millions | |
| Other income | |||
| Capital gain | 841 | 54 | - |
| Past service cost | 7 | - | 14 |
| Retroactive electricity charges | - | 6 | 16 |
| Insurance compensation | - | 30 | 30 |
| Other | 11 | 19 | 11 |
| Other income recorded in the income statements | 859 | 109 | 71 |
| Other expenses | |||
| Provision for legal claims | 31 | 31 | 21 |
| Impairment of assets | 19 | 32 | 489 |
| Provision for historical waste removal and site closure costs | 18 | - | 51 |
| Provision for early retirement and dismissal of employees | 7 | 20 | 39 |
| Environment related provisions | 1 | 7 | - |
| Other | 8 | - | 18 |
| �� | |||
| Other expenses recorded in the income statements | 84 | 90 | 618 |
| For the year ended December 31 | |||
| 2018 | 2017 | 2016 | |
| $ millions | $ millions | $ millions | |
| Financing income and expenses | |||
| Financing income: | |||
| Financing income recorded in relation to employee benefits | 7 | - | - |
| Net change in fair value of derivative financial instruments | - | 104 | 24 |
| Net gain from changes in exchange rates and interest income | 49 | 1 | 1 |
| 56 | 105 | 25 | |
| Financing expenses: | |||
| Interest expenses to banks and others | 117 | 120 | 151 |
| Financing expenses in relation to employee benefits | - | 38 | 17 |
| Banks and finance institutions commissions (mainly commission on early repayment of loans) | 18 | 16 | 4 |
| Net change in fair value of derivative financial instruments | 101 | - | - |
| Net loss from changes in exchange rates | - | 78 | 7 |
| Financing expenses | 236 | 252 | 179 |
| Net of borrowing costs capitalized | 22 | 23 | 22 |
| 214 | 229 | 157 | |
| Net financing expenses recorded in the income statements | 158 | 124 | 132 |
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 20 - Details of Income Statement Items (cont'd)
For the year ended December 31 | |||
2021 | 2020 | 2019 | |
$ millions | $ millions | $ millions | |
Selling, transport and marketing expenses | |||
Land and Marine transportation | 742 | 515 | 509 |
Cost of labor | 171 | 134 | 133 |
Other | 154 | 117 | 125 |
1,067 | 766 | 767 | |
General and administrative expenses | |||
Cost of labor | 166 | 136 | 153 |
Professional Services | 44 | 32 | 42 |
Other | 66 | 64 | 59 |
276 | 232 | 254 | |
Research and development expenses, net | |||
Cost of labor | 52 | 40 | 36 |
Other | 12 | 14 | 14 |
64 | 54 | 50 |
For the year ended December 31 | |||
2021 | 2020 | 2019 | |
$ millions | $ millions | $ millions | |
Other income |
|
|
|
Capital gain | 16 | 0 | 12 |
Profit from divestment | 14 | 0 | 0 |
Past service cost | 12 | 11 | 5 |
Reversal of provision for legal claims | 11 | 0 | 7 |
Reversal of Impairment of fixed assets | 9 | 0 | 10 |
Other | 1 | 9 | 6 |
Other income recorded in the income statements | 63 | 20 | 40 |
Other expenses | |||
Provision for legal claims | 17 | 0 | 14 |
Provision for historical waste removal and site closure costs | 14 | 83 | 7 |
Transaction costs | 8 | 0 | 0 |
Impairment and disposal of assets | 9 | 90 | 0 |
Provision for early retirement and dismissal of employees | 0 | 78 | 5 |
Other | 9 | 5 | 4 |
Other expenses recorded in the income statements | 57 | 256 | 30 |
ICL Group LimitedConsolidated Financial Statements104
Notes to the Consolidated Financial Statements as of December 31, 2021
Note
For the year ended December 31 | |||
2021 | 2020 | 2019 | |
$ millions | $ millions | $ millions | |
Financing income and expenses | |||
Financing income: | |||
Net gain from change in fair value of derivative designated as economic hedge | 59 | 0 | 45 |
Net gain from change in fair value of derivative designated as cash flow hedge | 18 | 54 | 38 |
Interest income from banks and others | 17 | 7 | 8 |
94 | 61 | 91 | |
Financing expenses: | |||
Interest expenses to banks and others | 126 | 120 | 125 |
Net loss from changes in exchange rates | 79 | 58 | 72 |
Financing expenses in relation to employees’ benefits | 23 | 38 | 39 |
Banks and finance institutions commissions (mainly commission on early repayment of loans) | 6 | 4 | 3 |
Net loss from change in fair value of derivative designated as economic hedge | 0 | 23 | 0 |
Financing expenses | 234 | 243 | 239 |
Net of borrowing costs capitalized | 18 | 24 | 19 |
216 | 219 | 220 | |
Net financing expenses recorded in the income statements | 122 | 158 | 129 |
ICL Group LimitedConsolidated Financial Statements105
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 21 - Financial Instruments and Risk Management
A. General
The GroupCompany has extensive international operations wherein it is exposed to credit, liquidity and market risks (including currency, interest and other price risks). In order to reduce the exposure to these risks, the GroupCompany holds financial derivative instruments, (including forward transactions, SWAP transactions, and options) to reduce the exposure to foreign currency risks, commodity price risks, energy and marine transport and interest risks. Furthermore, the GroupCompany holds derivative financial instruments to hedge the exposure and changes in the cash flows.
The transactions in derivatives are executed with large Israeli and non-Israeli financial institutions, and therefore GroupCompany management believes the credit risk in respect thereof is low.
This Note presents information about the Group’sCompany's exposure to each of the above risks, and the Group’sCompany's objectives, policies and processes for measuring and managing risk.
The Company regularly monitor the extent of our exposure and the rate of the hedging transactions for the various risks described below. WeThe Company execute hedging transactions according to our hedging policy with reference to the actual developments and expectations in the various markets.
ICL Group LimitedConsolidated Financial Statements106
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 21 - Financial Instruments and Risk Management (cont'd)
B. Groups and measurement bases of financial assets and financial liabilities
As of December 31, 2021 | ||||
Financial assets | Financial liabilities | |||
Measured at fair value through the statement of income | Measured at amortized cost | Measured at fair value through the statement of income | Measured at amortized cost | |
$ millions | $ millions | $ millions | $ millions | |
Current assets | ||||
Cash and cash equivalents | 0 | 473 | 0 | 0 |
Short-term investments and deposits | 0 | 91 | 0 | 0 |
Trade receivables | 0 | 1,418 | 0 | 0 |
Other receivables | 0 | 45 | 0 | 0 |
Foreign currency derivative designated as economic hedge | 23 | 0 | 0 | 0 |
Marine transport derivative designated as economic hedge | 2 | 0 | 0 | 0 |
Foreign currency and interest derivative instruments designated as cash flow hedge | 23 | 0 | 0 | 0 |
Non-current assets | ||||
Foreign currency and interest derivative instruments designated as cash flow hedge | 97 | 0 | 0 | 0 |
Other non-current asset | 0 | 14 | 0 | 0 |
Total financial assets | 145 | 2,041 | 0 | 0 |
Current liabilities | ||||
Short term debt | 0 | 0 | 0 | (577) |
Trade payables | 0 | 0 | 0 | (1,064) |
Other current liabilities | 0 | 0 | 0 | (153) |
Foreign currency derivative designated as economic hedge | 0 | 0 | (3) | 0 |
Non-current liabilities | ||||
Long term debt and debentures | 0 | 0 | 0 | (2,436) |
Interest derivative instruments designated as economic hedge | 0 | 0 | (7) | 0 |
Other non- current liabilities | 0 | 0 | 0 | (49) |
Total financial liabilities | 0 | 0 | (10) | (4,279) |
Total financial instruments, net | 145 | 2,041 | (10) | (4,279) |
| Cash and cash equivalents | - | - | 121 | - | - |
| Short-term investments and deposits | - | - | 92 | - | - |
| Trade receivables | - | - | 990 | - | - |
| Other receivables | 13 | - | 30 | - | - |
| Investments at fair value through other comprehensive income | - | 145 | - | - | - |
| Other non-current assets | 15 | - | 66 | - | - |
| Total financial assets | 28 | 145 | 1,299 | - | - |
| Short term credit | - | - | - | - | (610) |
| Trade payables | - | - | - | - | (715) |
| Other current liabilities | - | - | - | (21) | (330) |
| Long-term debt and debentures | - | - | - | - | (1,815) |
| Other non-current liabilities | - | - | - | - | (6) |
| Total financial liabilities | - | - | - | (21) | (3,476) |
| Total financial instruments, net | 28 | 145 | 1,299 | (21) | (3,476) |
ICL Group LimitedConsolidated Financial Statements107
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2321 - Financial Instruments and Risk Management (cont'd)
B. Groups and measurement bases of financial assets and financial liabilities (cont'd)
As | ||||||
Financial assets | Financial liabilities | |||||
Measured at fair value through the statement of income | Measured at fair value through the statement of comprehensive income | Measured at amortized cost | Measured at fair value through the statement of income | Measured at amortized cost | ||
$ millions | $ millions | $ millions | $ millions | $ millions | ||
Current assets | |||||
Cash and cash equivalents | 0 | 0 | 214 | 0 | 0 |
Short-term investments and deposits | 0 | 0 | 100 | 0 | 0 |
Trade receivables | 0 | 0 | 883 | 0 | 0 |
Other receivables | 0 | 0 | 122 | 0 | 0 |
Investments at fair value through other comprehensive income | 0 | 53 | 0 | 0 | 0 |
Foreign currency and interest derivative designated as economic hedge | 24 | 0 | 0 | 0 | 0 |
Non-current assets | |||||
Foreign currency and interest derivative instruments designated as cash flow hedge | 115 | 0 | 0 | 0 | 0 |
Investments at fair value through other comprehensive income | 0 | 83 | 0 | 0 | 0 |
Other non-current asset | 0 | 0 | 8 | 0 | 0 |
Total financial assets | 139 | 136 | 1,327 | 0 | 0 |
Current liabilities | |||||
Short term debt | 0 | 0 | 0 | 0 | (679) |
Trade payables | 0 | 0 | 0 | 0 | (740) |
Other current liabilities | 0 | 0 | 0 | 0 | (156) |
Foreign currency and interest derivative designated as economic hedge | 0 | 0 | 0 | (42) | 0 |
Energy and marine transport derivative designated as economic hedge | 0 | 0 | 0 | (1) | 0 |
Non-current liabilities | |||||
Long term debt and debentures | 0 | 0 | 0 | 0 | (2,053) |
Foreign currency and interest derivative designated as economic hedge | 0 | 0 | 0 | (13) | 0 |
Foreign currency and interest derivative instruments designated as cash flow hedge | 0 | 0 | 0 | (28) | 0 |
Other non- current liabilities | - | 0 | 0 | 0 | (53) |
Total financial liabilities | 0 | 0 | 0 | (84) | (3,681) |
Total financial instruments, net | 139 | 136 | 1,327 | (84) | (3,681) |
| Cash and cash equivalents | - | - | 83 | - | - |
| Short-term investments and deposits | - | - | 90 | - | - |
| Trade receivables | - | - | 932 | - | - |
| Other receivables | 5 | - | 81 | - | - |
| Investments at fair value through other comprehensive income | - | 212 | - | - | - |
| Other non-current assets | 64 | - | 9 | - | - |
| Total financial assets | 69 | 212 | 1,195 | - | - |
| Short term credit | - | - | - | - | (822) |
| Trade payables | - | - | - | - | (790) |
| Other current liabilities | - | - | - | (3) | (311) |
| Long-term debt and debentures | - | - | - | - | (2,388) |
| Other non-current liabilities | - | - | - | (3) | (1) |
| Total financial liabilities | - | - | - | (6) | (4,312) |
| Total financial instruments, net | 69 | 212 | 1,195 | (6) | (4,312) |
ICL Group LimitedConsolidated Financial Statements108
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2321 - Financial Instruments and Risk Management (cont'd)
C. Credit risk
(1) General
(a) Customer credit risks
Credit risk is the risk of financial loss to the GroupCompany if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and it arises mainly from the Group’sCompany’s receivables from customers and from other receivables as well as from investments in securities.
The Company sells to a wide range and large number of customers, including customers with material credit balances. On the other hand, the Company does not have a concentration of sales to individual customers.
The Company has a regular policy of insuring the credit risk of its customers by means of purchasing credit insurance with insurance companies, other than sales to government agencies and sales in small amounts. Most of all other sales are executed only after receiving approval of coverage in the necessary amount from an insurance company or other collaterals of a similar level.
The use of an insurance company as aforementioned ensures that the credit risk is managed professionally and objectively by an expert external party and transfers most of the credit risk to third parties. Nevertheless, the common deductible in credit insurances is 10% (even higher in a small number of cases) thus the GroupCompany is still exposed to part of the risk, out of the total insured amount.
In addition, the GroupCompany has an additional deductible cumulative annual amount of approximately $6 million through a wholly‑owned captive reinsurance Company.company.
Most of the Group’sCompany’s customers have been trading with the GroupCompany for many years and only rarely have credit losses been incurred by the Group.Company. The financial statements include specific allowance for doubtful debts that appropriately reflect, in Management’s opinion, the credit loss in respect of accounts receivables which are considered doubtful.
(b) Credit risks in respect of deposits
The GroupCompany deposits its balance of liquid financial assets in bank deposits and in securities. All the deposits are with a diversified group of leading banks preferably with banks that provide loans to the Group.Company.
ICL Group LimitedConsolidated Financial Statements109
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2321 - Financial Instruments and Risk Management (cont'd)
C. Credit risk (cont’d)(cont'd)
(2) Maximum Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
As of December 31 | ||
Carrying amount ($ millions) | ||
2021 | 2020 | |
| As at December 31 | ||
| Carrying amount ($ millions) | ||
| 2018 | 2017 | |
Cash and cash equivalents | 473 | 214 |
Short term investments and deposits | 91 | 100 |
Trade receivables | 1,418 | 883 |
Other receivables | 45 | 122 |
Derivatives | 145 | 139 |
Other non-current assets | 14 | 8 |
2,186 | 1,466 |
| Cash and cash equivalents | 121 | 83 |
| Short term investments and deposits | 92 | 90 |
| Trade receivables | 990 | 932 |
| Other receivables | 43 | 86 |
| Investments at fair value through other comprehensive income | 145 | 212 |
| Other non-current assets | 81 | 73 |
| 1,472 | 1,476 |
The maximum exposure to credit risk for trade receivables, at the reporting date by geographic region was:
As of December 31 | ||
Carrying amount ($ millions) | ||
2021 | 2020 | |
| As at December 31 | ||
| Carrying amount ($ millions) | ||
| 2018 | 2017 | |
Asia | 440 | 258 |
Europe | 362 | 330 |
South America | 306 | 68 |
North America | 193 | 144 |
Israel | 95 | 67 |
Other | 22 | 16 |
1,418 | 883 |
| Western Europe | 294 | 332 |
| Asia | 342 | 293 |
| North America | 150 | 131 |
| South America | 106 | 70 |
| Israel | 72 | 70 |
| Other | 26 | 36 |
| 990 | 932 |
(3) Aging of debts and impairment losses
The aging of trade receivables at the reporting date was:
As of December 31 | ||||
2021 | 2020 | |||
Gross | Impairment | Gross | Impairment | |
$ millions | $ millions | $ millions | $ millions | |
| As at December 31 | ||||
| 2018 | 2017 | |||
| Gross | Impairment | Gross | Impairment | |
| $ millions | $ millions | $ millions | $ millions | |
| Not past due | 829 | - | 785 | - | 1,313 | (1) | 788 | 0 |
| Past due up to 3 months | 114 | - | 125 | - | 82 | 0 | 58 | 0 |
| Past due 3 to 12 months | 38 | (1) | 23 | (6) | 23 | (2) | 7 | (1) |
| Past due over 12 months | 12 | (2) | 10 | (5) | 9 | (6) | 40 | (9) |
| 993 | (3) | 943 | (11) | 1,427 | (9) | 893 | (10) |
ICL Group LimitedConsolidated Financial Statements110
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 21 - Financial Instruments and Risk Management (cont'd)
C. Credit risk (cont'd)
(3) Aging of debts and impairment losses (cont'd)
The movement in the allowance offor doubtful accounts during the year was as follows:
2021 | 2020 | |
$ millions | $ millions |
| 2018 | 2017 | |
| $ millions | $ millions |
| Balance as at January 1 | 11 | 6 | ||
Balance as of January 1 | 10 | 3 | ||
| Additional allowance | 1 | 5 | (3) | 5 |
| Write offs | (7) | (1) | ||
| Reversals | (1) | - | (2) | 0 |
| Changes due to translation differences | (1) | 1 | 4 | 2 |
| Balance as at December 31 | 3 | 11 | ||
Balance as of December 31 | 9 | 10 | ||
D. Liquidity risk
Liquidity risk is the risk that the GroupCompany will not be able to meet its financial obligations as they fall due. The Group’sCompany’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to timely meet its liabilities, under both normal and stressed conditions, without incurring unwanted losses.
The Company manages the liquidity risk by holding cash balances, short-term deposits and secured bank credit facilities.
The following are the contractual maturities of financial liabilities, including estimated interest payments:
As | |||||
Carrying amount | 12 months or less | 1-2 years | 3-5 years | More than 5 years | |
$ millions | |||||
Non-derivative financial liabilities | |||||
Short term debt (not including current maturities) | 327 | 329 | 0 | 0 | 0 |
Trade payables | 1,064 | 1,064 | 0 | 0 | 0 |
Other current liabilities | 153 | 153 | 0 | 0 | 0 |
Long-term debt, debentures and others | 2,735 | 352 | 1,003 | 799 | 1,532 |
4,279 | 1,898 | 1,003 | 799 | 1,532 | |
Financial liabilities – derivative instruments | |||||
Foreign currency and interest derivative designated as economic hedge | 10 | 3 | 0 | 7 | 0 |
| Non-derivative financial liabilities | |||||
| Short term credit (not including current maturities) | 544 | 556 | - | - | - |
| Trade payables | 715 | 715 | - | - | - |
| Other current liabilities | 330 | 330 | - | - | - |
| Long-term debt and debentures | 1,881 | 152 | 453 | 1,084 | 1,166 |
| 3,470 | 1,753 | 453 | 1,084 | 1,166 | |
| Financial liabilities – derivative instruments utilized for economic hedging | |||||
| Foreign currency and interest derivative instruments | 16 | 16 | - | - | - |
| Derivative instruments on energy and marine transport | 5 | 4 | 1 | - | - |
| 21 | 20 | 1 | - | - |
ICL Group LimitedConsolidated Financial Statements111
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2321 - Financial Instruments and Risk Management (cont'd)
D. Liquidity risk (cont'd)
As | |||||
Carrying amount | 12 months or less | 1-2 years | 3-5 years | More than 5 years | |
$ millions | |||||
Non-derivative financial liabilities | |||||
Short term debt (not including current maturities) | 296 | 299 | 0 | 0 | 0 |
Trade payables | 740 | 740 | 0 | 0 | 0 |
Other current liabilities | 156 | 156 | 0 | 0 | 0 |
Long-term debt, debentures and others | 2,489 | 489 | 529 | 859 | 1,559 |
3,681 | 1,684 | 529 | 859 | 1,559 | |
Financial liabilities – derivative instruments utilized for economic hedging | |||||
Foreign currency and interest derivative designated as economic hedge | 55 | 42 | 0 | 0 | 13 |
Energy and marine transport derivative designated as economic hedge | 1 | 1 | 0 | 0 | 0 |
Foreign currency and interest derivative designated as cash flow hedge | 28 | 0 | 0 | 0 | 28 |
84 | 43 | 0 | 0 | 41 |
| Non-derivative financial liabilities | |||||
| Short term credit (not including current maturities) | 810 | 822 | - | - | - |
| Trade payables | 790 | 790 | - | - | - |
| Other current liabilities | 310 | 310 | - | - | - |
| Long-term debt and debentures | 2,400 | 102 | 345 | 1,085 | 1,358 |
| 4,310 | 2,024 | 345 | 1,085 | 1,358 | |
| Financial liabilities – derivative instruments utilized for economic hedging | |||||
| Foreign currency and interest derivative instruments | 6 | 3 | - | - | 3 |
E. Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the fair value or future cash flows of a financial instrument.
1. Interest risk
The GroupCompany has loans bearing variable interests and therefore its financial results and cash flows are exposed to fluctuations in the market interest rates.
The Company uses financial instruments, including derivatives, in order to hedge this exposure. The GroupCompany uses interest rate swap contracts mainly in order to reduce the exposure to cash flow risk in respect of changes in interest rates.
As part of the global reform in interest rate benchmarks, the Libor GBP settings ceased from 1 January 2022 and replaced by SONIA (GBP) Benchmark. Most US dollar LIBOR settings will continue to be calculated using panel bank submissions until mid-2023.
As of December 31,2021, USD LIBOR continues to be used as a reference rate and in valuation of instruments with maturities that exceed the expected end date for LIBOR. the Company has USD 30 million Libor Based Debt and USD 150 million LIBOR Based derivatives that exceed the expected end date for LIBOR.
As of December 31,2021, we have not finalized an agreement with the banks regarding the Libor transition effects on loans and derivatives.
ICL Group LimitedConsolidated Financial Statements112
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2321 - Financial Instruments and Risk Management (cont'd)
E. Market risk (cont'd)
1. Interest risk (cont'd)
(a) Interest Rate Profile
Set forth below is detailare details regarding the type of interest on the Group’sCompany’s non-derivative interest‑bearing financial instruments:
As of December 31 | ||
2021 | 2020 | |
$ millions | $ millions | |
| As at December 31 | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
Fixed rate instruments | ||
Financial assets | 338 | 165 |
Financial liabilities | (2,466) | (2,450) |
(2,128) | (2,285) | |
Variable rate instruments | ||
Financial assets | 36 | 223 |
Financial liabilities | (562) | (296) |
(526) | (73) |
| Fixed rate instruments: | ||
| Financial assets | 151 | 88 |
| Financial liabilities | (1,728) | (1,800) |
| (1,577) | (1,712) | |
| Variable rate instruments | ||
| Financial assets | 128 | 97 |
| Financial liabilities | (714) | (1,428) |
| (586) | (1,331) |
(b) Sensitivity analysis for fixed rate instruments
Most of the Group’sCompany’s instruments bearing fixed interest are not measured at fair value through the statement of income. Therefore, changes in the interest rate as at the date of the report will not be expected to have any impact on the profit or loss in respect of changes in the value of assets and liabilities bearing fixed interest.
(c) Sensitivity analysis for variable rate instruments
The below analysis assumes that all other variables (except for the interest rate), in particular foreign currency rates, remain constant.
As | ||||
Impact on profit (loss) | ||||
Decrease of 1% in interest | Decrease of 0.5% in interest | Increase of 0.5% in interest | Increase of 1% in interest | |
$ millions | $ millions | $ millions | $ millions | |
SWAP instruments | ||||
Changes in U.S. Dollar interest | (32) | (16) | 15 | 29 |
Changes in Israeli Shekel interest | 39 | 19 | (18) | (35) |
| Changes in U.S Dollar interest | ||||
| Non-derivative instruments | (1) | (1) | 1 | 1 |
| SWAP instruments | (18) | (9) | 9 | 18 |
| (19) | (10) | 10 | 19 | |
| Changes in Israeli Shekel interest | ||||
| SWAP instruments | 19 | 10 | (10) | (19) |
ICL Group LimitedConsolidated Financial Statements113
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 23-21- Financial Instruments and Risk Management (cont'd)
E. Market risk (cont’d)(cont'd)
1. Interest risk (cont’d)(cont'd)
(d) Terms of derivative financial instruments used to hedge interest risk
As | ||||
Carrying amount (fair value) | Stated amount | Maturity date | Interest rate range | |
$ millions | $ millions | Years | % | |
U.S. Dollar | ||||
SWAP contracts from variable interest to fixed interest | (7) | 150 | 2024 | 2.47-2.6% |
Israeli Shekel | ||||
SWAP contracts from fixed ILS interest to fixed USD interest | 119 | 579 | 2034 | 2.4-4.47% |
| U.S Dollar | ||||
| SWAP contracts from variable interest to fixed interest | - | 250 | 2019-2024 | 1.7%-2.6% |
| Israeli Shekel | ||||
| Swap contracts from fixed ILS interest to fixed USD interest | 15 | 486 | 30/3/2024 | 2.45%-4.74% |
| Euro | ||||
| Swap contracts from variable USD interest to fixed EUR interest | (1) | 334 | 15/2/2019 | 1-month Libor |
As | ||||
Carrying amount (fair value) | Stated amount | Maturity date | Interest rate range | |
$ millions | $ millions | Years | % | |
U.S. Dollar | ||||
SWAP contracts from variable interest to fixed interest | (13) | 150 | 2024 | 2.47%-2.60% |
Israeli Shekel | ||||
SWAP contracts from fixed ILS interest to fixed USD interest | 87 | 701 | 2034 | 2.40%-4.47% |
GBP | ||||
SWAP contracts from variable USD interest to fixed GBP interest. | 5 | 63 | 18/05/2021 | 1-month libor |
Euro | ||||
SWAP contracts from variable USD interest to fixed EUR interest | (41) | 324 | 19/05/2021 | 1-month libor |
| U.S Dollar | ||||
| SWAP contracts from variable interest to fixed interest | (3) | 350 | 2018-2024 | 1.36% - 2.6% |
| Israeli Shekel | ||||
| SWAP contracts from fixed ILS interest to fixed USD interest | 64 | 489 | 1/3/2024 | 2.45% - 4.74% |
| Euro | ||||
| SWAP contracts from variable USD interest to fixed EUR interest | (1) | 51 | 15/8/2018 | 1-month Libor |
ICL Group LimitedConsolidated Financial Statements114
Notes to the Consolidated Financial Statements as atof December 31, 2018
2021
Note 23-21 - Financial Instruments and Risk Management (cont'd)
E. Market risk (cont’d)(cont'd)
2. Currency risk
The GroupCompany is exposed to currency risk with respect to sales, purchases, assets and liabilities that are denominated in a currency other than the functional currency of the Group.Company. The main exposure is the NIS,New Israeli Shekel, Euro, British Sterling, Chinese Yuan Brazilian Real and Turkey Lira.Lira.
The GroupCompany enters into foreign currency derivatives – forward exchange transactions and currency options – all in order to protect the GroupCompany from the risk that the eventual cash flows, resulting from existing assets and liabilities, and sales and purchases of goods within the framework of firm or anticipated commitments (based on a budget of up to one year), denominated in foreign currency, will be affected by changes in the exchange rates.
(a) Sensitivity analysis
A 10% increase at the rate of the US$ against the following currencies would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.
As of December 31 | ||
Impact on profit (loss) | ||
2021 | 2020 | |
$ millions | $ millions | |
| As at December 31 | ||
| Impact on profit (loss) | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
Non-derivative financial instruments | ||
U.S. Dollar/Euro | (80) | (96) |
U.S. Dollar/Israeli Shekel | 177 | 134 |
U.S. Dollar/British Pound | (1) | 2 |
U.S. Dollar/Chinese Yuan | 1 | (1) |
U.S. Dollar/Turkey Lira | 0 | (1) |
| Non-derivative financial instruments | ||
| U.S Dollar/Euro | (64) | (9) |
| U.S Dollar/Israeli Shekel | 92 | 92 |
| U.S Dollar/British Pound | (3) | 3 |
| U.S Dollar/Chinese Yuan | (12) | (4) |
| U.S Dollar/Turkey Lira | (1) | (1) |
A 10% decrease of the US$ against the above currencies atas of December 31 would have the same effect but in the opposite direction.
ICL Group LimitedConsolidated Financial Statements115
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2321 - Financial Instruments and Risk Management (cont'd)
E. Market risk (cont'd)
2. Currency risk (cont'd)
(a) Sensitivity analysis (cont'd)
Presented hereunder is a sensitivity analysis of the Group’sCompany’s foreign currency derivative instruments as atof December 31, 2018.2021. Any change in the exchange rates of the principal currencies shown below as at December 31 would have increased (decreased) profit and loss and equity by the amounts shown below. This analysis assumes that all other variables remain constant.
As | ||||
Increase 10% | Increase 5% | Decrease 5% | Decrease 10% | |
$ millions | $ millions | $ millions | $ millions | |
U.S. Dollar/Israeli Shekel | ||||
Forward transactions | (48) | (25) | 27 | 58 |
Options | (40) | (18) | 25 | 55 |
SWAP | (69) | (36) | 40 | 85 |
Euro/ U.S. Dollar | ||||
Forward transactions | 22 | 11 | (11) | (22) |
Options | 5 | 2 | (3) | (6) |
U.S Dollar/RMB | ||||
Forward transactions | (4) | (2) | 3 | 5 |
| Euro/ U.S Dollar | ||||
| Forward transactions | 9 | 4 | (4) | (8) |
| Options | 5 | 2 | (2) | (4) |
| SWAP | 34 | 17 | (17) | (34) |
| U.S Dollar/Israeli Shekel | ||||
| Forward transactions | (32) | (17) | 19 | 39 |
| Options | (75) | (41) | 19 | 43 |
| SWAP | (48) | (25) | 28 | 58 |
| British Pound/U.S Dollar | ||||
| Forward transactions | (4) | (2) | 2 | 3 |
| Options | (1) | (1) | - | 1 |
| U.S Dollar/Chinese Yuan Renminbi | ||||
| Forward transactions | (3) | (1) | 2 | 3 |
| British Pound/Euro | ||||
| Forward transactions | (4) | (2) | 2 | 4 |
ICL Group LimitedConsolidated Financial Statements116
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 21 - Financial Instruments and Risk Management (cont'd)
E. Market risk (cont'd)
2. Currency risk (cont'd)
(b) Terms of derivative financial instruments used to reduce foreign currency risk
As of December 31, 2021 | |||
Carrying amount | Stated amount | Average | |
$ millions | $ millions | exchange rate | |
Forward contracts | |||
U.S. Dollar/Israeli Shekel | 3 | 515 | 3.2 |
Euro/U.S. Dollar | 4 | 240 | 1.2 |
U.S Dollar/Brazilian Real | (1) | 37 | 5.4 |
U.S. Dollar/British Pound | 0 | 16 | 1.4 |
U.S. Dollar/Chinese Yuan Renminbi | 1 | 46 | 6.5 |
Other | 0 | 23 | 0 |
Currency and interest SWAPs | |||
U.S. Dollar/Israeli Shekel | 119 | 579 | 3.7 |
Put options | |||
U.S. Dollar/Israeli Shekel | 14 | 660 | 3.2 |
Euro/U.S. Dollar | 2 | 57 | 1.2 |
U.S. Dollar/Japanese Yen | 0 | 4 | 109.7 |
U.S. Dollar/British Pound | 0 | 12 | 1.4 |
Call options | |||
U.S. Dollar/Israeli Shekel | (2) | 660 | 3.2 |
Euro/U.S. Dollar | 0 | 57 | 1.2 |
U.S. Dollar/Japanese Yen | 0 | 4 | 109.7 |
U.S. Dollar/British Pound | 0 | 12 | 1.4 |
ICL Group LimitedConsolidated Financial Statements117
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 2321 - Financial Instruments and Risk Management (cont'd)
E. Market risk (cont'd)
2. Currency risk (cont'd)
(b) Terms of derivative financial instruments used to reduce foreign currency risk
As | |||
Carrying amount | Stated amount | Average | |
$ millions | $ millions | exchange rate | |
Forward contracts | |||
U.S. Dollar/Israeli Shekel | 8 | 377 | 3.2 |
Euro/U.S. Dollar | 0 | 150 | 1.2 |
U.S. Dollar/British Pound | 0 | 27 | 1.4 |
U.S. Dollar/Chinese Yuan Renminbi | 0 | 23 | 6.6 |
Other | 0 | 53 | 0 |
Currency and interest SWAPs | |||
U.S. Dollar/Israeli Shekel | 87 | 701 | 3.7 |
Euro/U.S. Dollar | (41) | 324 | 1.1 |
U.S. Dollar/British Pound | 5 | 63 | 1.3 |
Put options | |||
U.S. Dollar/Israeli Shekel | 13 | 400 | 3.3 |
Euro/U.S. Dollar | 0 | 47 | 1.2 |
U.S. Dollar/Japanese Yen | 0 | 2 | 107 |
U.S. Dollar/British Pound | 0 | 10 | 1.3 |
Call options | |||
U.S. Dollar/Israeli Shekel | (1) | 380 | 3.3 |
Euro/U.S. Dollar | (2) | 47 | 1.2 |
U.S. Dollar/Japanese Yen | 0 | 2 | 107 |
U.S. Dollar/British Pound | 0 | 10 | 1.3 |
| Forward contracts | |||
| U.S Dollar/Israeli Shekel | 2 | 352 | 3.7 |
| Euro/U.S Dollar | 2 | 86 | 1.2 |
| Euro/British Pound | 1 | 19 | 0.9 |
| U.S Dollar/British Pound | - | 32 | 1.3 |
| U.S Dollar/Chinese Yuan Renminbi | - | 29 | 6.5 |
| Other | - | 37 | - |
| Currency and interest SWAPs | |||
| U.S Dollar/Israeli Shekel | 15 | 486 | 3.7 |
| Euro/U.S Dollar | (1) | 334 | 1.1 |
| Put options | |||
| U.S Dollar/Israeli Shekel | 1 | 695 | 3.6 |
| Euro/U.S Dollar | 2 | 45 | 1.2 |
| U.S Dollar/Japanese Yen | - | 3 | 114.3 |
| U.S Dollar/British Pound | - | 11 | 1.3 |
| Call options | |||
| U.S Dollar/Israeli Shekel | (15) | 695 | 3.6 |
| Euro/U.S Dollar | - | 45 | 1.2 |
| U.S Dollar/Japanese Yen | - | 3 | 114.3 |
| U.S Dollar/British Pound | - | 11 | 1.3 |
ICL Group LimitedConsolidated Financial Statements118
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2321 - Financial Instruments and Risk Management (cont'd)
E. Market risk (cont'd)
2. Currency risk (cont'd)
| Forward contracts | |||
| U.S Dollar/Israeli Shekel | 2 | 430 | 3.5 |
| Euro/U.S Dollar | (3) | 320 | 1.2 |
| Euro/British Pound | - | 20 | 0.9 |
| U.S Dollar/British Pound | - | 24 | 1.3 |
| U.S Dollar/Chinese Yuan Renminbi | (1) | 33 | 6.7 |
| Other | - | 33 | - |
| Currency and interest SWAPs | |||
| U.S Dollar/Israeli Shekel | 64 | 489 | 3.7 |
| Put options | |||
| U.S Dollar/Israeli Shekel | 5 | 525 | 3.4 |
| Euro/U.S Dollar | - | 63 | 1.2 |
| U.S Dollar/Japanese Yen | - | 3 | 115.5 |
| Call options | |||
| U.S Dollar/Israeli Shekel | (1) | 525 | 3.4 |
| Euro/U.S Dollar | (2) | 63 | 1.2 |
| U.S Dollar/Japanese Yen | - | 3 | 115.5 |
(c) Linkage terms of monetary balances – in millions of Dollars
As | ||||||||
US Dollar | Euro | British Pound | Israeli Shekel | Brazilian Real | Chinese Yuan Renminbi | Other | Total | |
| Non-derivative instruments: | |||||||||||||||
| Cash and cash equivalents | 41 | 21 | 4 | 2 | 5 | 37 | 11 | 89 | 23 | 5 | 3 | 76 | 263 | 14 | 473 |
| Short term investments and deposits | 74 | 3 | - | 12 | 3 | 86 | 0 | 3 | 2 | 91 | |||||
| Trade receivables | 516 | 222 | 60 | 25 | 72 | 35 | 684 | 260 | 41 | 82 | 222 | 91 | 38 | 1,418 | |
| Other receivables | 6 | 12 | - | 12 | - | - | 2 | 22 | 1 | 19 | 1 | 0 | 45 | ||
| Investments at fair value through other comprehensive income | - | - | 145 | - | |||||||||||
| Other non-current assets | 60 | 1 | - | 1 | 4 | - | - | 4 | 0 | 5 | 0 | 1 | 14 | ||
| Total financial assets | 697 | 259 | 64 | 75 | 34 | 266 | 49 | 865 | 309 | 47 | 104 | 304 | 357 | 55 | 2,041 |
| Short-term credit | 201 | 166 | 19 | 34 | 6 | 184 | - | ||||||||
Short-term debt | 196 | 92 | 12 | 184 | 41 | 52 | 0 | 577 | |||||||
| Trade payables | 150 | 188 | 23 | 265 | 11 | 72 | 6 | 210 | 216 | 28 | 410 | 103 | 91 | 6 | 1,064 |
| Other current liabilities | 55 | 46 | 7 | 192 | 2 | 19 | 9 | 33 | 73 | 4 | 18 | 10 | 15 | 153 | |
| Long term debt, debentures and others | 1,322 | 5 | - | 480 | 13 | 1 | - | 1,161 | 499 | 21 | 635 | 51 | 67 | 2 | 2,436 |
Other non-current liabilities | 1 | 46 | 0 | 2 | 0 | 49 | |||||||||
| Total financial liabilities | 1,728 | 405 | 49 | 971 | 32 | 276 | 15 | 1,601 | 926 | 65 | 1,247 | 207 | 225 | 8 | 4,279 |
| Total non-derivative financial instruments, net | (1,031) | (146) | 15 | (896) | 2 | (10) | 34 | (736) | (617) | (18) | (1,143) | 97 | 132 | 47 | (2,238) |
| Derivative instruments: | |||||||||||||||
| Forward transactions | - | 86 | 51 | 352 | - | 29 | 37 | 0 | 240 | 16 | 515 | 37 | 46 | 23 | 877 |
| Cylinder | - | 45 | 11 | 695 | - | 3 | 0 | 57 | 12 | 660 | 0 | 4 | 733 | ||
| SWAPS – U.S Dollar into Israeli Shekel | - | - | 486 | - | - | ||||||||||
| SWAPS – U.S Dollar into Euro | - | 334 | - | - | |||||||||||
SWAPS – U.S. Dollar into Israeli Shekel | - | 579 | - | 579 | |||||||||||
| Total derivative instruments | - | 465 | 62 | 1,533 | - | 29 | 40 | 0 | 297 | 28 | 1,754 | 37 | 46 | 27 | 2,189 |
| Net exposure | (1,031) | 319 | 77 | 637 | 2 | 19 | 74 | (736) | (320) | 10 | 611 | 134 | 178 | 74 | (49) |
ICL Group LimitedConsolidated Financial Statements119
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2321 - Financial Instruments and Risk Management (cont'd)
E. Market risk (cont'd)
2. Currency risk (cont'd)
(c) Linkage terms of monetary balances – in millions of Dollars (cont'd)
As | ||||||||
US Dollar | Euro | British Pound | Israeli Shekel | Brazilian Real | Chinese Yuan Renminbi | Others | Total | |
Non-derivative instruments: | ||||||||
Cash and cash equivalents | 114 | 13 | 5 | 2 | 6 | 60 | 14 | 214 |
Short term investments and deposits | 88 | 5 | 0 | 0 | 0 | 4 | 3 | 100 |
Trade receivables | 454 | 227 | 35 | 58 | 21 | 51 | 37 | 883 |
Other receivables | 72 | 41 | 0 | 7 | 0 | 0 | 2 | 122 |
Investments at fair value through other comprehensive income | 0 | 0 | 0 | 0 | 0 | 136 | 0 | 136 |
Other non-current assets | 1 | 3 | 0 | 0 | 4 | 0 | 0 | 8 |
Total financial assets | 729 | 289 | 40 | 67 | 31 | 251 | 56 | 1,463 |
Short-term debt | 267 | 70 | 85 | 181 | 7 | 68 | 1 | 679 |
Trade payables | 145 | 163 | 21 | 326 | 11 | 66 | 8 | 740 |
Other current liabilities | 41 | 68 | 4 | 17 | 0 | 26 | 156 | |
Long term debt, debentures and others | 1,211 | 36 | 22 | 716 | 2 | 60 | 6 | 2,053 |
Other non-current liabilities | 2 | 51 | 0 | 0 | 0 | 0 | 0 | 53 |
Total financial liabilities | 1,666 | 388 | 132 | 1,240 | 20 | 220 | 15 | 3,681 |
Total non-derivative financial instruments, net | (937) | (99) | (92) | (1,173) | 11 | 31 | 41 | (2,218) |
Derivative instruments: | ||||||||
Forward transactions | 0 | 150 | 27 | 377 | 15 | 23 | 38 | 630 |
Cylinder | 0 | 47 | 10 | 400 | 20 | 0 | 2 | 479 |
SWAPS – U.S. Dollar into Israeli Shekel | 0 | 0 | 0 | 701 | 0 | 0 | 0 | 701 |
SWAPS – U.S. Dollar into Euro | 0 | 324 | 0 | 0 | 0 | 0 | 0 | 324 |
SWAPS – U.S. Dollar into British Pound | 0 | 0 | 63 | 0 | 0 | 0 | 0 | 63 |
Total derivative instruments | 0 | 521 | 100 | 1,478 | 35 | 23 | 40 | 2,197 |
Net exposure | (937) | 422 | 8 | 305 | 46 | 54 | 81 | (21) |
| Non-derivative instruments: | |||||||
| Cash and cash equivalents | 19 | 18 | 7 | 1 | 7 | 22 | 9 |
| Short term investments and deposits | 82 | 1 | - | - | - | 5 | 2 |
| Trade receivables | 419 | 246 | 48 | 59 | 31 | 92 | 37 |
| Other receivables | 40 | 1 | - | 39 | - | - | 1 |
| Investments at fair value through other comprehensive income | - | - | - | - | - | 212 | - |
| Other non-current assets | 5 | 1 | - | - | 3 | - | - |
| Total financial assets | 565 | 267 | 55 | 99 | 41 | 331 | 49 |
| Short-term credit | 427 | 158 | 20 | 36 | 8 | 173 | - |
| Trade payables | 187 | 182 | 23 | 289 | 15 | 85 | 9 |
| Other current liabilities | 95 | 77 | 15 | 96 | 2 | 21 | 5 |
| Long term debt, debentures and others | 1,721 | 29 | - | 522 | 22 | 98 | - |
| Total financial liabilities | 2,430 | 446 | 58 | 943 | 47 | 377 | 14 |
| Total non-derivative financial instruments, net | (1,865) | (179) | (3) | (844) | (6) | (46) | 35 |
| Derivative instruments: | |||||||
| Forward transactions | - | 320 | 44 | 430 | - | 33 | 33 |
| Cylinder | - | 63 | - | 525 | - | - | 3 |
| Total derivative instruments | - | 383 | 44 | 955 | - | 33 | 36 |
| Net exposure | (1,865) | 204 | 41 | 111 | (6) | (13) | 71 |
ICL Group LimitedConsolidated Financial Statements120
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2321 - Financial Instruments and Risk Management (cont'd)
E. Market risk (cont’d)(cont'd)
3. Other price risk
(b) Financial asset at amortized cost
As part of the issuedsale of the fire safety and outstanding share capital onoil additives businesses, in 2018, the Company granted a fully diluted basis of YYTH,loan to the buyers, in the carrying amount of approximately $145$53 million (as at bearing interest to be paid along with the loan principal. As of December 31, 2018). The investment is measured at fair value, and fair value updates, are recognized directly2021, the loan has been fully repaid in the consolidated statementa total amount including interest of comprehensive income.
4. Hedge accounting
The Company is exposed to riskchanges in the exchange rate of the Israeli shekel against the dollar in respect of marine shippingprincipal and energy costs.interest in certain debentures, loans, labor costs and other operating expenses. The Company uses marine shipping and energy derivativesCompany's risk management strategy is to hedge the risk that itschanges in cash flows will be affectedderiving from liabilities, labor costs and other operational costs denominated in Israeli shekels by changesusing derivatives. These exposures are hedged from time to time, according to the assessment of the exposure and inherent risks against which the Company chooses to hedge, in marine shippingaccordance with the Company's risk management strategy.
In view of the above, in the fourth quarter of 2021, the Company designated several forward contracts and energy prices.options transactions for cash flow hedge and applied hedge accounting. These transactions, which include a portion of labor costs and other operational costs denominated in Israeli shekel, are intended to secure the effect of the change in the exchange rate of the dollar against the hedged portion, thereby protecting the Company's operating income from currency fluctuation. The Company applies a 1:1 hedging ratio. The main source of potential ineffectiveness in these hedging ratios is negligible schedule differences between the hedged item and the hedging instrument. As of the date of the hedge transaction, the total balance of the hedged instruments amounted to about $230 million
In January and May 2020, the Company designated several swap contracts for cash flow hedge and applied hedge accounting. These transactions, which include principal and interest of Series G debentures, entitle the Company to receive fixed Israeli shekel interest against a liability to pay dollar interest at December 31, 2018,a fixed rate. The Company designated the spot component of the exchange rate swap contracts for hedging the currency risk in the cash flows of the said debt balances. The Company applies a 1:1 hedging ratio. The main source of potential ineffectiveness in these hedging ratios is the effect of the Company's and counterparty's credit risk on the fair value of the marine shippingswap contracts. As of the date of the hedge transaction, the total balance of the hedged instruments amounted to about $110 million and energy derivatives was approximately $(5) million.$109 million, respectively.
ICL Group LimitedConsolidated Financial Statements121
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 21 - Financial Instruments and Risk Management (cont'd)
F. Fair value of financial instruments
The carrying amounts in the books of certain financial assets and financial liabilities, including cash and cash equivalents, investments, short-term deposits and loans, receivables and other debit balances, long-term investments and receivables, short-term credit, payables and other credit balances, long-term loans bearing variable interest and other liabilities, and derivative financial instruments, correspond to or approximate their fair value.
The following table details the book value and the fair value of financial instrument groups presented in the financial statements not in accordance with their fair value:
As | As | |||
Carrying amount | Fair value | Carrying amount | Fair value | |
$ millions | $ millions | $ millions | $ millions | |
| Loans bearing fixed interest (1) | 238 | 244 | 271 | 279 | 407 | 408 | 89 | 96 |
| Debentures bearing fixed interest | ||||||||
| Marketable (2) | 1,201 | 1,217 | 1,247 | 1,291 | 1,524 | 1,730 | 1,625 | 1,870 |
| Non-marketable (3) | 281 | 279 | 281 | 288 | 195 | 208 | 281 | 296 |
| 1,720 | 1,740 | 1,799 | 1,858 | 2,126 | 2,346 | 1,995 | 2,262 | |
| (1) | The fair value of the Shekel, Euro, Brazilian Real and Yuan loans issued bearing fixed interest is based on calculation of the present value of the cash flows in respect of the principal and the interest and is discounted at the market interest rates on the measurement date for similar loans having similar characteristics and is classified as Level 2 in the fair value hierarchy. The average discount interest as of December 31, 2021, for the Shekel, Euro Brazilian Real and Yuan loans was 1.5%, 1.2%, 13% and 4%, respectively (December 31, 2020, for the Shekel, Euro and Yuan loans 1.6%, 1.4%, and 5.1%, respectively). |
| (2) | The fair value of the marketable debentures is based on the quoted stock exchange price and is classified as Level 1 in the fair value hierarchy. |
| (3) | The fair value of the non‑marketable debentures is based on calculation of the present value of the cash flows in respect of the principal and the interest and is discounted at the Libor rate customary in the market for similar loans having similar characteristics and is classified as Level 2 in the fair value hierarchy. The average discount interest as of December 31, 2021, was 2.5% (December 31, 2020 – 2.6%). |
ICL Group LimitedConsolidated Financial Statements122
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2321 - Financial Instruments and Risk Management (cont'd)
G. Hierarchy of fair value
The following table presents an analysis of the financial instruments measured by fair value, using the valuation method.method (See Note 4).
The following levels were defined:
Level 1: Quoted (unadjusted) prices in an active market for identical instruments
Level 2: Observed data (directly or indirectly) not included in Level 1 above.
Level 1 | As | As of December 31, 2020 |
$ millions | $ millions |
Investments at fair value through other comprehensive income | 0 | 136 |
Level 2 | As of December 31, 2021 | As of December 31, 2020 |
$ millions | ||
$ millions |
Derivatives designated as economic hedge, net | 15 | (32) |
Derivatives designated as cash flow hedge, net | 120 | 87 |
135 | 55 |
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2422 - Earnings per Share
Basic earnings per share
Calculation of the basic earnings per share for the year ended December 31, 2018,2021, is based on the earnings allocated to the holders of the ordinary shares divided by the weighted-average number of ordinary shares outstanding, calculated as follows:
For the year ended December 31 | |||
2021 | 2020 | 2019 | |
$ millions | $ millions | $ millions | |
| For the year ended December 31 | |||
| 2018 | 2017 | 2016 | |
| $ millions | $ millions | $ millions | |
Earnings | 783 | 11 | 475 |
Weighted-average number of ordinary shares in thousands: | |||
For the year ended December 31 | |||
2021 | 2020 | 2019 | |
Shares thousands | Shares thousands | Shares thousands | |
Balance as of January 1 | 1,280,242 | 1,279,379 | 1,278,084 |
Shares issued during the year | 223 | 29 | 98 |
Shares vested | 2,342 | 618 | 768 |
Weighted average number of ordinary shares used in computation of the basic earnings per share | 1,282,807 | 1,280,026 | 1,278,950 |
| For the year ended December 31 | |||
| 2018 | 2017 | 2016 | |
| Shares thousands | Shares thousands | Shares thousands | |
| Balance as at January 1 | 1,276,238 | 1,274,298 | 1,272,516 |
| Shares issued during the year | 73 | 1,054 | - |
| Shares vested | 898 | 720 | 779 |
| Weighted average number of ordinary shares used in computation of the basic earnings per share | 1,277,209 | 1,276,072 | 1,273,295 |
Diluted earnings per share
Calculation of the diluted earnings per share for the year ended December 31, 2018,2021, is based on the earnings allocated to the holders of the ordinary shares divided by the weighted-average number of ordinary shares outstanding after adjustment for the number of potential diluted ordinary shares, calculated as follows:
Weighted average number of ordinary shares (diluted) in thousands:
For the year ended December 31 | |||
2021 | 2020 | 2019 | |
Shares thousands | Shares thousands | Shares thousands | |
Weighted average number of ordinary shares used in the computation of the basic earnings per share | 1,282,807 | 1,280,026 | 1,278,950 |
Effect of stock options and restricted shares* | 4,244 | 247 | 3,106 |
Weighted average number of ordinary shares used in the computation of the diluted earnings per share | 1,287,051 | 1,280,273 | 1,282,056 |
| For the year ended December 31 | |||
| 2018 | 2017 | 2016 | |
| Shares thousands | Shares thousands | Shares thousands | |
| Weighted average number of ordinary shares used in the computation of the basic earnings per share | 1,277,209 | 1,276,072 | 1,273,295 |
| Effect of stock options and restricted shares | 2,572 | 925 | - |
| Weighted average number of ordinary shares used in the computation of the diluted earnings per share | 1,279,781 | 1,276,997 | 1,273,295 |
ICL Group LimitedConsolidated Financial Statements124
Notes to the Consolidated Financial Statements as their effect would have been anti‑dilutive.of December 31, 2021
Note 22 - Earnings per Share (cont'd)
The average market value of the Company’s shares, for purposes of calculating the dilutive effect of the stock options, is based on the quoted market prices for the period in which the options were outstanding.
Note 2523 - Related and Interested Parties
Related parties within its meaning in IAS 24 (2009), “Related Parties Disclosure”; Interested parties within their meaning in Paragraph 1 of the definition of an “interested party” in Section 1 of the Israeli Securities Law, 1968.
| A. | Parent company and subsidiaries |
Israel Corp. is a public company listed for trading on the Tel Aviv Stock Exchange (TASE). Based on the information provided by Israel Corp., Millenium Investments Elad Ltd. (“Millenium”) and Mr. Idan Ofer are considered as joint controlling shareholders jointly of Israel Corp., for purposes of the Israeli Securities Law (each of Millenium and Mr. Idan Ofer hold shares in Israel Corp. directly, and Mr. Idan Ofer serves as a director of Millenium and has an indirect interest in it as the beneficiary of the discretionary trust that has indirect control of Millenium, as stated below). Millenium holds approximately 46.94%44.44% of the share capital in Israel Corp., which holds as atof December 31, 20182021, approximately 45.86%45.62% of the voting rights and approximately 44.76% of the issued share capital, of the Company.
best of Israel Corp.’s knowledge, Millenium is held by Mashat Investments(Investments) Ltd. (“Mashat”Mashat”) and by XT Investments Ltd. (“XT Investments”Investments”), with 80%84.73% and 20%15.27% holding rates in the issued share capital, respectively. (It is noted that Mashat granted XT Investments a power of attorney for a fixed period (which is extendable) to vote according to XT's discretion at General Meetings of Millenium in respect of shares constituting 5% of the voting rights in Millenium). Mashat is wholly owned by Ansonia Holdings Singapore B.V. (“Ansonia”) which is incorporated in the Netherlands.. Ansonia is a wholly owned subsidiary of Jelany Corporation N.V. (registered in Curaçao), which is a wholly owned subsidiary of a Liberian company,by Court Investments Ltd. (“Court”). Court is wholly owned by a foreign discretionary trust, in which Mr. Idan Ofer is the beneficiary. XT Investments is fully heldwholly owned by XT Holdings Ltd. (“XT Holdings”), a company whose. To the best of Israel Corp.’s knowledge, ordinary shares of XT Holdings are held in equal shares by Orona Investments Ltd. (which is indirectly controlled by Mr. Ehud Angel) and by Lynav Holdings Ltd. ("Lynav"), a company thatwhich is controlled by a foreign discretionary trust in which Mr. Idan Ofer is the beneficiary. Mr. Ehud Angel holds, among other things, a special share that grants him, inter alia, under certain limitations and for certain issues, an additional vote on the Board of Directors of XT Holdings. Lynav also holds directly 1.25% of the issued share capital of Israel Corp. In addition, Kirby Enterprises Inc., which is to the best of Israel Corp.’s knowledge, indirectly held by the same trust that holds Mashat, in which, as stated, Mr. Idan Ofer is the beneficiary, holds approximately 0.74% of the issued share capital of Israel Corp. Furthermore, Mr. Idan Ofer holds directly approximately 3.85% of the issued share capital of Israel Corp.
ICL Group LimitedConsolidated Financial Statements125
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 23 - Related and Interested Parties (cont'd)
| A. | Parent company and subsidiaries (cont'd) |
As of December 31, 2018, 141 2021, 184 million ordinary shares have been pledged by Israel Corporation to secure certain liabilities, almost entirely comprised of margin loans with an aggregate outstanding principal amount of $260about $314 million.
| B. | Benefits to key management personnel (including directors) |
The senior managers, in addition to their salaries, are entitled to non-cash benefits (such as vehicle,, mobile etc.). The Group contributes to a post-employment defined benefit plan on their behalf. In accordance with the terms of the plan, the retirement age of senior managers is 67. Senior managers and directors also participate in the Company's incentive and equity remuneration plans (options for Company sharesshares) (see Notes 16 and restricted shares (see Note 21)19).
Set forth below are details of the benefits for key management personnel in 20182021 and 2017.2020.
The Company's key management personnel in 2018,2021, consists of 2722 individuals,, of whom 1411 are not employed by the company (directors). The number ofCompany's key management personnel in 2018, includes 7 individuals whose tenure was terminated during 2018. The Company's key management personnel in 2017,2020, consisted of 2119 individuals,, of whom 10 were not employed by the Company (directors).
For the year ended December 31 | ||
2021 | 2020 | |
$ millions | $ millions | |
| For the year ended December 31 | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
Short-term benefits | 12 | 9 |
Post-employment benefits | 1 | 1 |
Share-based payments | 5 | 7 |
Total * | 18 | 17 |
* To interested parties employed by the Company | 3 | 3 |
* To interested parties not employed by the Company | 1 | 2 |
| Short-term benefits | 11 | 8 |
| Post-employment benefits | 1 | 1 |
| Share-based payments | 4 | 4 |
| Total * | 16 | 13 |
| * To interested parties employed by the Company | 5 | 4 |
| * To interested parties not employed by the Company | 1 | 1 |
C. Ordinary transactions that are not exceptional
The Company’s Board of Directors, withfollowing the agreementapproval of the Audit Committee, decided that a transaction with related and interested parties will be considered a “negligible transaction” for public reporting purposes if all the following conditions have been met:
(1) It is not an “extraordinary transaction” within the meaning thereof in the Companies Law.
(2) The effect of each of the parameters listed hereunderbelow is less than one percent (hereinafter – the Negligibility Threshold)Threshold).
ICL Group LimitedConsolidated Financial Statements126
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 23 - Related and Interested Parties (cont'd)
| C. | Ordinary transactions that are not exceptional (cont'd) |
For every transaction or arrangement that is tested for the Negligibility Threshold, the parameters will be examined, to the extent they are relevant, on the basis of the Company's condensed or audited consolidated financial statements, as applicable, prior to the transaction, as detailed below:
Acquisition of assets
Assets ratio – the amount of the assets in the transaction divided by total assets
Sale of assets
Assets ratio – the amount of the assets in the transaction divided by total assets.
Profit ratio – the profit or loss attributed to the transaction divided by the total annual comprehensive income or loss during the period.
Financial liabilities
Liabilities ratio – the amount of the liabilities in the transaction divided by the total liabilities.
Financing expenses ratio – the expected financing expenses in the specific transaction divided by the total financing expenses in the statement of income.
Acquisition and sale of products, services and manufacturing inputs
Revenue ratio – estimated revenue from the transaction divided by the annual revenue, or
Manufacturing expenses ratio – the amount of the expenses in the transaction divided by the annual cost of sales.
(3) The transaction is negligible also from a qualitative point of view. For the purpose of this criterion,criteria, it shall be examined whether there are special considerations justifying a special report onreporting of the transaction, even if it does not meet the quantitative criteria described above.
(4) In examining the negligibility of a transaction expected to occur in the future, among other things, the probability of the transaction occurring iswill be examined.
ICL Group LimitedConsolidated Financial Statements127
Notes to be examined.the Consolidated Financial Statements as of December 31, 2021
Note 23 - Related and Interested Parties (cont'd)
D. Transactions with related and interested parties
For the year ended December 31 | |||
2021 | 2020 | 2019 | |
$ millions | $ millions | $ millions | |
| For the year ended December 31 | |||
| 2018 | 2017 | 2016 | |
| $ millions | $ millions | $ millions | |
Sales | 7 | 3 | 4 |
Cost of sales | 6 | 3 | 8 |
Selling, transport and marketing expenses | 13 | 7 | 10 |
Financing expenses (income), net | (2) | (1) | (1) |
General and administrative expenses | 1 | 1 | 1 |
Management fees to the parent company | 1 | 1 | 1 |
| Sales | 5 | 8 | 35 |
| Cost of sales | 19 | 97 | 113 |
| Selling, transport and marketing expenses | 7 | 8 | 7 |
| Financing expenses (income), net | 3 | (9) | - |
| General and administrative expenses | 1 | 1 | 1 |
| Management fees to the parent company | 1 | 1 | 1 |
On |
| (2) | On January 30, 2020, our shareholders approved a new three-year framework transaction for the Company's engagement in directors' and officers' liability insurance policies, starting February 1, 2020 (the "New Framework Transaction"). The insurance policies under the New Framework Transaction shall include a joint primary tier with Israel Corp. with a joint liability cap of up to $20 million, and a separate tier covering the Company alone, with a liability cap of up to $330 million, with a total liability limit of up to $350 million for both tiers. |
ICL Group LimitedConsolidated Financial Statements128
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2523 - Related and Interested Parties (cont’d)(cont'd)
D. Transactions with related and interested parties(cont’d)parties (cont'd)
Our directors and officers are beneficiaries of both tiers. Pursuant to the New Framework Agreement, the cost of the annual premium shall not exceed a cap of $10 million for both tiers. The division of the premium amount between the Company and Israel Corp. in the joint tier are 80% to be paid by the Company and 20% by the Israel Corp, and the HR & Compensation Committee and the Board of Directors have the authority to change, from time to time, the premium allocation in respect of the joint tier between the companies, according to the recommendation of the insurers and/or brokers, and provided that such changes will not exceed 25% over the entire transaction period. Deviation from these limits shall require shareholder approval. In accordance with the terms of the New Framework Transaction and the Company's Compensation Policy, the Company's directors’ and officers’ liability insurance policy for 2021, was approved by the Company's authorized organs, effective as of March 2021. The 2021 directors’ and officers’ liability insurance policy includes a liability limit of $116 million for both tiers (comprised of a limit of $40 million, with an additional coverage Side A (directors and officers only) limit of $76 million).
In |
ICL Group LimitedConsolidated Financial Statements129
Notes to the Consolidated Financial Statements as of December 31, 2021
Note 23 - Related and Interested Parties (cont'd)
| D. | Transactions with related and interested parties (cont'd) |
| (4) | In October 2020, the Company and Oil Refineries Ltd. signed individual bridge supply agreements with Tamar Reservoir for the supply of natural gas, following a process of joint negotiations with the supplier and the approval of ICL's general meeting of shareholders. For further information see Note 18. |
E. Balances with related and interested parties
Composition:
As of December 31 | ||
2021 | 2020 | |
$ millions | $ millions | |
| As at December 31 | ||
| 2018 | 2017 | |
| $ millions | $ millions | |
| Other current assets | 28 | 38 | 40 | 35 |
| Other current liabilities | 7 | 191 | 4 | 2 |
ICL Group LimitedConsolidated Financial Statements130
Notes to the Consolidated Financial Statements as atof December 31, 20182021
Note 2624 – Group Main Entities
| Ownership interest in its subsidiary and investee companies for the year ended December 31 | |||
| Name of company | Principal location of the company’s activity | 2018 | 2017 |
| ICL Israel Ltd. | Israel | 100.00% | 100.00% |
| Dead Sea Works Ltd. | Israel | 100.00% | 100.00% |
| Dead Sea Bromine Company Ltd. | Israel | 100.00% | 100.00% |
| Rotem Amfert Negev Ltd. | Israel | 100.00% | 100.00% |
| Mifalei Tovala Ltd. | Israel | 100.00% | 100.00% |
| Dead Sea Magnesium Ltd. | Israel | 100.00% | 100.00% |
| Ashli Chemicals (Holland) B.V. | Israel | 100.00% | 100.00% |
| Bromine Compounds Ltd. | Israel | 100.00% | 100.00% |
| Tetrabrom Technologies Ltd.* | Israel | 0.00% | 100.00% |
| Fertilizers and Chemicals Ltd. | Israel | 100.00% | 100.00% |
| Iberpotash S.A. | Spain | 100.00% | 100.00% |
| Fuentes Fertilizantes S.L. | Spain | 100.00% | 100.00% |
| ICL Europe Coöperatief U.A. | The Netherlands | 100.00% | 100.00% |
| ICL-IP Europe B.V. | The Netherlands | 100.00% | 100.00% |
| ICL IP Terneuzen B.V. | The Netherlands | 100.00% | 100.00% |
| ICL Fertilizers Europe C.V. | The Netherlands | 100.00% | 100.00% |
| ICL Finance B.V. | The Netherlands | 100.00% | 100.00% |
| Everris International B.V. | The Netherlands | 100.00% | 100.00% |
| ICL Puriphos B.V. | The Netherlands | 100.00% | 100.00% |
| ICL-IP America Inc. | United States of America | 100.00% | 100.00% |
| ICL Specialty Products Inc. | United States of America | 100.00% | 100.00% |
| Everris N.A. Inc. | United States of America | 100.00% | 100.00% |
| Phosphorus Derivatives Inc.** | United States of America | 0.00% | 100.00% |
| BK Giulini GmbH | Germany | 100.00% | 100.00% |
| ICL Holding Germany GmbH | Germany | 100.00% | 100.00% |
| ICL I.P. Bitterfeld GmbH | Germany | 100.00% | 100.00% |
| Rovita GmbH | Germany | 100.00% | 100.00% |
| Prolactal GmbH | Austria | 100.00% | 100.00% |
| Cleveland Potash Ltd. | United Kingdom | 100.00% | 100.00% |
| ICL Brasil, Ltda. | Brazil | 100.00% | 100.00% |
| ICL (Shanghai) Investment Co. Ltd. | China | 100.00% | 100.00% |
| Yunnan Phosphate Haikou Co. Ltd. | China | 50.00% | 50.00% |
| Sinobrom Compounds Co. Ltd., China | China | 75.00% | 75.00% |
| ICL Asia Ltd. | Hong Kong | 100.00% | 100.00% |
| ICL Trading (HK) Ltd. | Hong Kong | 100.00% | 100.00% |
| Allana Potash Afar PLC*** | Ethiopia | 100.00% | 100.00% |
Ownership interest in its subsidiary and investee companies for the year ended December 31 | |||
Name of company | Principal location of the company’s activity | 2021 | 2020 |
ICL Israel Ltd. | Israel | 100.00% | 100.00% |
Dead Sea Works Ltd. | Israel | 100.00% | 100.00% |
Dead Sea Bromine Company Ltd. | Israel | 100.00% | 100.00% |
Rotem Amfert Negev Ltd. | Israel | 100.00% | 100.00% |
Mifalei Tovala Ltd. | Israel | 100.00% | 100.00% |
Dead Sea Magnesium Ltd. | Israel | 100.00% | 100.00% |
Bromine Compounds Ltd. | Israel | 100.00% | 100.00% |
Fertilizers and Chemicals Ltd. | Israel | 100.00% | 100.00% |
Iberpotash S.A. | Spain | 100.00% | 100.00% |
Fuentes Fertilizantes S.L. | Spain | 100.00% | 100.00% |
ICL Europe Coöperatief U.A. | The Netherlands | 100.00% | 100.00% |
ICL Europe B.V. | The Netherlands | 100.00% | 100.00% |
ICL IP Terneuzen B.V | The Netherlands | 100.00% | 100.00% |
ICL Finance BV | The Netherlands | 100.00% | 100.00% |
Everris International B.V. | The Netherlands | 100.00% | 100.00% |
ICL Puriphos B.V. | The Netherlands | 100.00% | 100.00% |
ICL-IP America Inc | United States of America | 100.00% | 100.00% |
ICL Specialty Products Inc | United States of America | 100.00% | 100.00% |
Everris NA, Inc. | United States of America | 100.00% | 100.00% |
Growers Holdings, Inc. | United States of America | 100.00% | 100.00% |
BK Giulini GmbH | Germany | 100.00% | 100.00% |
ICL Holding Germany GmbH | Germany | 100.00% | 100.00% |
ICL Bitterfeld GmbH | Germany | 100.00% | 100.00% |
Prolactal GmbH | Austria | 100.00% | 100.00% |
Cleveland Potash Ltd. | United Kingdom | 100.00% | 100.00% |
Everris Ltd. | United Kingdom | 100.00% | 100.00% |
ICL America do Sul | Brazil | 100.00% | 100.00% |
Agro Fertilaqua Participacoes S.A. | Brazil | 100.00% | 100.00% |
Qualyquímica Industria e Comercio de Produtos Quimicos Ltda | Brazil | 100.00% | 100.00% |
ICL Brasil, Ltda. | Brazil | 100.00% | 100.00% |
ICL Investment Co. Ltd. | China | 100.00% | 100.00% |
Yunnan Phosphate Haikou Co. Ltd. | China | 50.00% | 50.00% |
ICL Asia Ltd | Hong Kong | 100.00% | 100.00% |
ICL Trading (HK) Ltd. | Hong Kong | 100.00% | 100.00% |
Scora S.A.S., France | France | 100.00% | 100.00% |
ICL Group LimitedConsolidated Financial Statements131