4 August 2014 The Second Sheshinski Committee – Draft Recommendations Mr. Stefan Borgas – President & CEO

2 Government Take (GT) from the Industry that Extracts Natural Resources ICL acknowledges the right of the Israeli public* to optimize the benefits it receives from the extraction of Israel’s natural recourses What does “optimize benefits” mean? * within legal boundaries

3 ICL’s World Markets Suffer Under Significant Overcapacity in Which ICL-Israel is a Small Player Israel’s Total Capacity Global Overcapacity 3.6 million ton15 million tonPotash (55 Mio t) 3.5 million ton30 million tonPhosphate (200 Mio t) 29,000 ton> 200,000 tonMagnesium (700,000 t)

4 The Deteriorating Business Environment in Israel for ICL (NIS Until the End of the Concession ) NIS 10 billionExclusion from the Investment Encouragement Law2011 NIS 5.5 billionUndertaking to finance most of the harvesting project2012 NIS 1.75 billionIncrease in the rate of royalties on potash sales2012 NIS 1 billionRetroactive tax assessments for NIS 700 millionArbitration ruling on downstream products2014 Weakened phosphate industry Significant increase of labor cost NIS 7 billion?Draft recommendations of the Committee

 GT Around the World ⁻Committee: 25%-47% ⁻ICL’s experts: average 29%  GT in Israel following the Recommendations ⁻Committee: 46%-57% ⁻ICL’s experts: 70%-74% Including salt harvesting, signature bonus & dividend tax 5 Government Take (GT) From Potash in Comparison

6 ICL Optimizes its Business Opportunities Worldwide Available natural resources ICL’s technological “know how” Market environment (customers & logistics) Conditions for investments Worldwide opportunities for ICL

7 Investment Opportunities Worldwide Comparative advantages of other countries:  Rate on return for investment in Potash: over 20%  Production costs are decreasing  Governments provide incentives for investments: -Netherlands and UK – “patent box” -Germany – subsidies for corporate research -UK – subsidies investments -China – 10% pts tax rate reduction for “high tech” businesses

8 Investment Opportunities Worldwide -Ethiopia – 0% income tax; accelerated depreciation -China – reduced Income tax on phosphate; 3% royalty -West Africa – tax exemption for many years -Spain – no royalties; accelerated depreciation; reserve free of taxes; certain deductions in Corporate Income Tax

9 Challenges in the Global Market  Deteriorating prices of potash ($287 FOB) and phosphate ($80-$100/t)  Stagnant demand  Significant overcapacity  Shrinking bromine market – new downstream products must be developed Reduced availability of capital for ICL

10 Decisions Must Be Taken – What Would You Do? Continuation of Investments in Israel Investment Opportunities Worldwide Global Market Challenges & Opportunities Business Environment In Israel

1.Unavoidable changes in ICL’s activities  Magnesium  Bromine compounds  Phosphate downstream products 2.Investment plans in Israel are frozen  First step: NIS 2,500–3,800 million (next 5 years) 3.Aggressive cost reduction  Elimination or loss of direct and indirect jobs, mostly in the Negev: approximately 3, Decisions Must Be Taken

4.New investments or business acquisitions in other regions must be accelerated  Spain, Ethiopia, UK, South East Asia, Latin America, West Africa, Netherlands and China 5.Research and marketing functions will migrate over time to regions of value creation  3-5 years 12 Decisions Must Be Taken

… the total picture for the Israeli economy … a truthful outlook on ICL’s profitability vs. competitors … How to GROW the pie: ICL and its industry IN ISRAEL 13 In Conclusion, the Committee Should Consider …. Government Employees Shareholders Communities Universities ICL’s Profits

Thank You