Raw Materials & Material Extraction

ICL is a leading global specialty minerals company whose products are distributed and used worldwide. To manufacture these products, ICL utilizes a broad range of materials. ICL mines most of its raw materials and is unique in its material use efficiency, building on industrial synergies of its internal value chains, to create highly specialized minerals. In its ever-growing search for sustainable solutions, ICL is also researching alternative raw materials that advance a circular economy. \

ICL extracts three main minerals – Potash, Bromine and Phosphate which are raw materials for most of the downstream products that are part of the integrated value chains it has developed over the years. ICL extracts minerals and conducts mining at ICL Boulby (United Kingdom), ICL Iberia (Spain), ICL Rotem and ICL Dead Sea (both located in Israel), and YPH (China). The sites provide a consistent, reliable supply of raw materials, which are manufactured into products that fulfill global needs in agricultural, food and industrial products markets. Read more about our mining operations on p.127 of ICL’s 2022 Annual Report.

Green Mining Award in China

YPH was awarded the Green Mine certification (Ranked AAAAA) for excellence in mine planning, operations and mine remediation.

Sustainable Mining in ICL Iberia

ICL Iberia successfully passed a certification audit under UNE 22470 and 22480 standards which accredit the Company as a sustainable mining company. As a result, ICL Iberia is the first large scale underground mining company of non-arid minerals in Spain and Europe, that is certified in Sustainable Mining for all its activity.

In 2021, the Cabanasses ramp became operational after about nine years of construction. It is a key part of ICL Iberia's industrial project, helping to make its activity safer, more efficient, and sustainable from both an economic and environmental perspective.

The completion of the ramp has already eliminated the need of hundreds of trucks which used to transport the extracted mineral to the Suria site (now it's done through a series of conveyor belts), allowing to reduce CO2 emissions and increase road safety. It has also immediately helped increase air circulation in the mine, thus improving working conditions and our employees' safety. In terms of production, it is helping to gradually increase the production levels, which are expected to reach one million tonnes per year.

Circular Economy

ICL is researching and testing the possibilities of using waste and byproducts from both inside and outside the Company, as raw materials. This is a part of ICL’s path towards a circular economy.

For example, excess salt in ICL Dead Sea is being used in various circular economy projects in infrastructure and restoration. Another example was created during mapping and testing of various byproducts, as ICL discovered that a byproduct created as part of its magnesium production process is beneficial in a new market and it is now marketed and sold as a new product.

ICL produces a significant portion of its primary raw materials.

Industrial Products

The principal raw materials used by our Industrial Products segment for the manufacturing of its end products are bromine, chlorine, phosphorus and magnesia. The production process also uses significant amounts of water and energy. The segment produces a significant portion of its raw materials through operations to extract Dead Sea minerals.

Bromine is produced from end brines (salt solutions) that are a byproduct of the potash production process. The brine is pumped into ICL Industrial Products’ plant in Sodom, where bromine is produced in an oxidation process using chlorine and steam.

Chlorine is produced by electrolysis of sodium chloride and as a byproduct of the metal magnesium production process of Dead Sea magnesium Ltd. 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 byproduct of potash production in Sodom.

Industrial Products uses elemental bromine to manufacture bromine compounds at its facilities in Israel, the Netherlands and China. The remainder 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 is bisphenol A, used to manufacture the bromine-based flame retardant TBBA. Furthermore, the Industrial Products segment purchases many other raw materials that are required to produce its various products. We also produce products based on phosphorus at our sites in Germany and the US.

Elemental phosphorus (P4) is produced in a roasting process from ores, originating mainly in Central Asia (Kazakhstan), the US, Vietnam and China. The Industrial Products segment uses elemental phosphorus it procures to produce phosphorus compounds at its factories (mainly phosphorous based flame retardants). The basic phosphorus compound, POCl3, is manufactured in a chemical process that combines phosphorus, chlorine and oxygen. The reaction of this compound with a variety of other raw materials (such as Propylene Oxide) creates commercial phosphorus compounds.

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

Potash Segment

Our Potash segment produces and sells mainly potash, salts, magnesium, and electricity. Potash is produced in Israel and Spain using an evaporation process to extract potash from the Dead Sea at Sodom, Israel, and conventional mining from an underground mine in Spain. The segment also includes the production and sale of pure magnesium and magnesium alloys, as well as the production and sale of chlorine. In addition, the segment sells salt products produced at its potash site in Spain.

We produce potash from the Dead Sea and an underground mine in Spain. Our potash production process in Israel is based on carnallite extraction. The carnallite, a compound of potassium chloride (KCl) and magnesium chloride mixed with sodium chloride (NaCl), precipitates in some of the largest solar evaporation ponds in the world. The carnallite is transferred to ICL Dead Sea plants, where a chemical and physical process breaks down the carnallite crystal into potash using cold crystallization and hot leach technologies. In Spain, we extract potash by mining sylvinite in an underground mine. Sylvinite is a mixture of varying potash concentrations (KCl) and salt (NaCl), separated by a flotation process at our production plants near the mine.

Potash does not require additional chemical conversion to be used as a plant-nutrient fertilizer. Nevertheless, it can also serve as a raw material for certain specialty fertilizers and other industrial products.

Magnesium

The Potash segment includes magnesium production, operated by Dead Sea Magnesium Ltd., the largest magnesium producer outside China and the US. The magnesium business produces, markets, and sells pure magnesium, magnesium alloys, and dry carnallite.

Phosphate Solutions Segment

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.

The Phosphate Solutions segment has a developed production process that includes phosphate rock mining, along with production and purchase of different grades of phosphoric acid, to produce specialties products and commodities at different facilities around the world.

The Phosphate Solutions segment produces most of the raw materials it uses to produce its commodities and specialties products. The segment produces phosphate rock as the primary raw material for its backward integrated value chain, commencing from the mining of phosphate rock through the production of green phosphoric acid to the production of phosphate-based fertilizers, purified phosphoric acid and specialty phosphates.

The primary raw materials acquired from external sources are sulphur, ammonia, different grades of purified phosphoric acid, soda ash, caustic soda and potassium hydroxide.

For the dairy protein business, especially in the organic and goat segments, securing high-quality raw materials (whole milk, skimmed milk, and whey) is a key element of operations. A balance between short- and long-term agreements secures supply, while maintaining adaptability to changing market conditions.

Growing Solutions Segment

The Growing Solutions segment develops, manufactures, markets, and sells fertilizers based primarily on phosphate, nitrogen, potash (potassium chloride), and polysulphate. It produces water soluble specialty fertilizers in Belgium, The Netherlands, Israel, and Spain, liquid fertilizers in Israel, Spain, and Brazil, straight soluble fertilizers in China and Israel, controlled release fertilizers in the Netherlands, Brazil, and the US, as well as secondary nutrients, bio-stimulants, 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.

The primary raw materials acquired from external sources are KNO₃, SOP, ammonia, NPK granules, Urea, KOH, coating materials, micronutrients and biostimulants ingredients. In addition, our specialty fertilizer business benefits from its backward integration to raw materials produced by the Company, such as KCl, MGA, GTSP, MKP and polysulphate.

Royalties

In consideration of the concessions, ICL pays royalties to the governments of Israel, China, UK and Spain.

Below are the total royalties expenses as recognized in the financial statements*:

$ millions	Israel	Out of Israel	Total
2022	150	5	155
2021	98	3	101
2020	71	3	74

*In the ESG Report for 2021 the royalties amounts were presented on a cash basis.

Taxation of Profits from Natural Resources

The Israeli Law for Taxation of Profits from Natural Resources (the Law) applies for the potash, bromine, phosphate, and magnesium minerals. The tax base, which will be calculated for every mineral separately, is the mineral’s operating income, in accordance with the accounting statement of income, to which certain adjustments will be made.

In June 2022, a settlement agreement was signed with the Israeli Tax Authority, which entered into force on July 26, 2022. The settlement agreement provides final assessments for the tax years 2016-2020, as well as outlines understandings for the calculation of the surplus profit levy for the years from 2021 onwards

For additional information regarding the Law and the Settlement Agreement see Note 15a(4) Taxation of Profits Natural Resources, in ICL’s 2022 Annual Report.

Sustainability Reporting Disclosures:

Disclosure: 102-9

Disclosure: 103-1

Disclosure: 103-2

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Circular Economy

Raw Materials & Material Extraction

Green Mining Award in China

Sustainable Mining in ICL Iberia

Circular Economy

Industrial Products

Potash Segment

Phosphate Solutions Segment

Growing Solutions Segment

Royalties

Taxation of Profits from Natural Resources

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