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Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

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Page 1: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

Harnessing NatureCreating Value

2nd Annual NASDAQ TASE Israeli Investor ConferenceNovember, 2007

Page 2: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

Focused Synergistic Responsible

Disclaimer

The information delivered or to be delivered to you does not constitute an offer or a recommendation to do any transaction in Israel Chemicals Ltd. (ICL) securities. Although our shares may be bought and sold on the Tel Aviv Stock Exchange (TASE) at any time, they do not constitute trade out of Israel - neither in the United States nor elsewhere and this presentation does not constitute an offer or investment advice to any US or other person at this time. If we ever do so, our offer will only be made by a prospectus or a registration statement conforming with the requirements of U.S. or any other applicable law.

Certain statements in this presentation and other oral and written statements made by ICL from time to time, are forward-looking statements, including, but not limited to, those that discuss strategies, goals, outlook or other non-historical matters; or project revenues, income, returns or other financial measures. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including, among others, the following: (a) the changes in worldwide economic and political conditions that impact interest and foreign exchange rates, (b) the extent to which ICL is able to successfully integrate acquisitions, achieve synergies and develop new markets, (c) the extent to which ICL is able to achieve savings from its various plans, (d) government funding and program approvals affecting products being developed or sold under government programs, and (e) cost and delivery performance under various program and development contracts. We caution you that the above list of important factors is not comprehensive. We refer you to filings that we have made with the TASE. They may discuss new or different factors that may cause actual results to differ materially from this information.

All information included in this document speaks only as of the date on which they are made, and we do not undertake any obligation to update such information afterwards.

Some of the market and industry information is based on independent industry publications or other publicly available information, while other information is based on internal studies. Although we believe that these independent sources and our internal data are reliable as of their respective dates, the information contained in them has not been independently verified and we can not assure you as to the accuracy or completeness of this information.

Readers and viewers are cautioned to consider these risks and uncertainties and to not place undue reliance on such information.

Page 3: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

Company Basics

Page 4: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

4 Focused Synergistic Responsible

Dynamic Controlling Shareholder

IDE [50% by ICL]

Sea Water Desalination

IDE [50% by ICL]

Sea Water Desalination

13$ bn Mkt. Cap ’06 Rev. >$3bn

1.8$ bn Mkt. Cap

200$ m Mkt. Cap

Page 5: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

5 Focused Synergistic Responsible

2006 Sales: $3.3 billion

A Balanced Business

Fertilizers41%

Industrial Products

25%

Performance Products

31%

Other3%

Note: % based on external sales

Page 6: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

6 Focused Synergistic Responsible

FertilizersIndustrialProducts*

PerformanceProducts

Potash

Phosphates

phosphate rockphosphoric acidfertilizersanimal feed additives

Flame retardants

based on Bromine &organophosphorus

Brominated Inorganic productsWater treatment biocidesOther

SpecialtyPhosphates

food & electronic gradephosphoric acidphosphate saltsfood additivesother phosphorus based products

Alumina & OtherChemicals

performance products

50%

50%

% 2006 Sales

61%

39%

80%

20%

* Including Supresta’s 2006 results

From Basic Minerals to Value-Added Products

Page 7: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

7 Focused Synergistic Responsible

Capital Research

5.3% Potash Corp10.1%

Public32.4%

Israel Corp52.2%

Recognized and Well Established

Shareholders

1952 Mining operations begin at Dead Sea & Negev desert

1975 ICL established as a state-owned holding company

1992 IPO (TASE)

1995 Israel Corporation acquires control

1999 Ofer Group acquires control of Israel Corporation

~ $13 billion market cap* * November 20, 2007

Page 8: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

8 Focused Synergistic Responsible

Increasing Share Price Compared to Peers

-60%-10%40%90%

140%190%240%290%340%390%440%490%540%590%640%690%740%790%840%890%940%990%

1040%1090%1140%1190%1240%1290%

31/12/2001 16/12/2003 30/11/2005 15/11/2007

IMC-MOSAIC PCS Albemarle Chemtura Agrium ICL ($)

Page 9: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

9 Focused Synergistic Responsible

S&P 500

ICL (US$)

Focused on Increasing Shareholders’ Value

TA 25

ICLNIS (NIS)

-15%85%

185%285%385%485%585%685%785%

31/12/2002 20/08/2003 08/04/2004 26/11/2004 18/07/2005 07/03/2006 23/10/2006 15/04/2007 22/09/2007

3.08.0

13.018.023.028.033.038.043.048.0

31/12/2001 16/12/2003 30/11/2005 15/11/2007

Page 10: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

10 Focused Synergistic Responsible

Second Largest Company on TASE

-50

50

150

250

350

450

31/12/2001 28/02/2003 30/04/2004 30/06/2005 31/08/2006 31/10/2007

-250%

-50%

150%

350%

550%

750%

950%

31/12/01 28/02/03 30/04/04 30/06/05 31/08/06 31/10/07

Trading Volumes

% Change in Market Cap

Page 11: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

11 Focused Synergistic Responsible

ROIC

ROE

25.0%*23.2%

31.2%

22.4%

10.5%10.4%8.1%10.9%

13.1%*12.9%

5.5% 5.3%5.5%4.2%

9.6%

14.4%

2000 2001 2002 2003 2004 2005 2006 2007

Impressive Returns

*Last 12 monthsROE (Return on equity) - Net income / (shareholders' equity + Debentures convertible into shares), average

ROIC (Return on invested capital ) = (Operating income ×(1-0.32)) / ((trade receivables + inventory – trade payables) + PP&E, net), average

Page 12: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

12 Focused Synergistic Responsible

Dividend Yield – ICL *Calculated according to market capitalization based on average share price adjusted for dividends.

Year Dividend Yield*

2001 4.0%

2002 4.8%

2003 4.5%

2004 4.5%

2005 3.6%

2006 6.4%

Page 13: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

13 Focused Synergistic Responsible

Strategic Focus on Core Businesses

Acquisitions and JV’s

~$1.06 billion worth*

Iberpotash

(Spain, 60%)Sinobrom

(50% JV)

Scora

(France)

NU3 (JV

between Yara,

SQM & ICL)

Rotem Turkey

(DCP/MCP

plant)

Cleveland

Potash Ltd.

(UK)

Food hygiene

bus., CFPI

(France)2 JV’s

in China

1998 1999 2000 20032001 2002 20052004

Adicon

(Brazil)

Astaris

(US)

* Including share acquisitions of ICL subsidiaries ($250 million in 1999-2000)

BKGLC

(JV in

China, 51%)

2006

JV with DKS

(Japan)

Iberpotash

(Spain, 40%)

Chemada

(Israel 26%)

2007

Fire-trol

Supresta

)US(

Biogema

Page 14: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

14 Focused Synergistic Responsible

Invested Significantly

Acquisitions$674M

Investments$960M

ICL Spent ~$1.6B from 2001-2007 on investments (net of grants) and acquisitions

Page 15: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

15 Focused Synergistic Responsible

Potash

Bromine

Magnesium

Salts

PhosphatesThe Negev

Desert

Direct Access to Low Cost Natural Resources

Iberpotash &CPL

Leveraging our low cost positions

The Dead Sea

Page 16: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

16 Focused Synergistic Responsible

#1 elemental bromine ~one third of global production

#1 in organophosphorus flame retardants

#1 producer of pure phosphoric acid

#1 in specialty phosphates

#1 supplier in Europe of PK fertilizers (compound potash & phosphate)

#2 Europe and #6 Worldwide in potash supply

#2 Western World - magnesium production

and…

Major player in specialty chemical high margin niche markets & specialty fertilizers

Leading Player in Global Industry

Page 17: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

17 Focused Synergistic Responsible

Strong Global Presence

North America 22%

South America 10%

Europe 37%

Israel 6%

Africa 2%Asia Pacific 23%

Sales by Geography (2006)

Page 18: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

18 Focused Synergistic Responsible

1,7071,969

2,2112,419

2,889

177

253

448

389

491

89

169

340

284

371

2003 2004 2005 2006 2007

Net Income Operating Income

Growing Revenues and Highly Profitable

Sales

$millions, first nine months

Page 19: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

19 Focused Synergistic Responsible

Environmental Strategy: An Active, Dedicated Focus

Integral part of ICL business strategy is preservation of the environment and full compliance with standards of environmental responsibility.

Environmental work plan includes investment of $130 million (2006 and 2007) to improve the environmental profile of operations.

Primary focus is on implementing processes for:

creating a safe work environment

improving safety of manufacturing processes

creating safe products for our customers (product lifecycle)

rehabilitation of areas for the benefit of the public, tourists (e.g. landscaping)

Environmental strategy includes full transparency to the government, environmental organizations and the public to increase trust in ICL’s stewardship of the environment.

Page 20: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

Business and Market Opportunities

Page 21: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

21 Focused Synergistic Responsible

Lowest Cost Potash Producer at Dead SeaSource : British Sulphur / CRU (June 2005)

Fertilizers

PCS (St.

John)

Canpotex (V

ancouver)

APCK+S

Belaruskali

ICL -

Israel

Uralkali,

Silvin

it (V

entspills

)

Uralkali,

Silvin

it (S

t. Pete

rsburg

)

Charges to FOB

Cost at mine

Page 22: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

22 Focused Synergistic Responsible

A Leader in Global Potash ProductionSource: Fertecon, IFA, companies reports and ICL estimates, 2006

Fertilizers

K+S12%

Agrium2%

PCS15%

APC3%

Others9%

Uralkali9%

Belaruskali17%

Mosaic12%

Silvinit11%

ICL10%

Exports byCanpotex

Exports byBPC

Page 23: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

23 Focused Synergistic Responsible

Long Term Increase in DemandSources: U.S. Census and FAO database

1975 1990 2005 20203,000

4,000

5,000

6,000

7,000

8,000

9,000

0.1

0.2

0.3

0.4

Population (millions) Hectares of land / capita

Fertilizers

Page 24: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

24 Focused Synergistic Responsible

Growing Demand for Biofuels

Fertilizers

0

5

10

15

20

25

30

35

40

45

50

1980 1985 1990 1995 2000 2005 2010

Bill

ion

Lite

rs

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Biodiesel

Ethanol

3.8% of Global Consumption of

Gasoline

0.4% of Global Consumption of

Diesel

Source: Earth Policy Institute, Renewable Fuel Association

Page 25: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

25 Focused Synergistic Responsible

Corn Wheat

Soybeans

Jun 2005 Sept 2006 Dec 2006 Mar 2007 Jun 2007 Sep 2007

Rising Grain PricesSource: CBOT

Fertilizers

Page 26: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

26 Focused Synergistic Responsible

Source: Fertecon, October 2007

Fertilizers

Steep Increases in Fertilizer Prices

Page 27: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

27 Focused Synergistic Responsible

ICL IP After Integrating Supresta

Industrial Products

* Based on 2006 sales, including Supresta’s 2006 results

Organophosphorus flame retardants

Brominated flame retardants

Brominated inorganic products

Other

Water treatment biocides

Page 28: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

28 Focused Synergistic Responsible

10-12 g/l

2-6 g/l

0.3 g/l

0.05 g/l

Dead Sea Brine

Brine Wells(USA* and Russia)

Underground Wells(China)

Sea Water(China, India, Japan)

Most Concentrated Bromine Source Source: ICL estimates* Arkansas – brine wells of Chemtura & Albemarle

Industrial Products

Page 29: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

29 Focused Synergistic Responsible

% of global capacitySources: Company estimates, US Bureau of Mines, ArkansasOil & Gas Commission, Companies’ press releases, 2006

#1 Bromine Producer

Chemtura16%

Albemarle23%

ICL33%

Others6%

China22%

Industrial Products

Page 30: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

30 Focused Synergistic Responsible

Flame retardants

49%

Industrial21%

Clear brines10%

Intermmediates10%

Agriculture5%Water

treatment5%

Bromine Compounds - Broad ApplicationsSource: ICL estimates

Industrial Products

Global Industry~2$ billion

Elemental bromine, photographic applications, butyl rubber, dyes & more

One of the 3 leading players in the industry

Page 31: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

31 Focused Synergistic Responsible

Leading Indicators for Bromine Market Trends

Worldwide Rig Count

Sources: Baker Hughes Rig Count, IPC Association, Semiconductor Equipment and Materials International (SEMI)

Industrial Products

1,500

2,000

2,500

3,000

3,500

Rigid Printed Circuit Boards Book to Bill Ratio(3 Months Average)

0

20

40

60

80

100

120

140

160

01/03

03/03

05/03

07/03

09/03

11/03

01/04

03/04

05/04

07/04

09/04

11/04

01/05

03/05

05/05

07/05

09/05

11/05

01/06

03/06

05/06

07/06

09/06

11/06

01/07

03/07

05/07

07/07

Month

Inde

x

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

Rat

io

Shipment Index Booking Index Book-to-Bill Ratio

139.3 98.7

Source: IPC

Page 32: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

32 Focused Synergistic Responsible

Supresta – Enhancing ICL-IP’sProduct Mix & Geographic Reach

ICL-IPHeadquarters PlantsMarketing & SalesLogistics CentersTech Service

Industrial Products

Acquisition of Supresta completed August ‘07 Segment sales of $1.1 billion annually A leader in the flame retardants market

SuprestaHeadquarters Major facilitiesSales representatives

Page 33: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

33 Focused Synergistic Responsible

Phosphate Downstream - Synergistic AcquisitionsT

yp

ica

l s

ell

ing

p

ric

e i

n $

/to

n

Services and Solutions

Food Additives – Worldwide

Phosphate Salts –

Europe &Asia

Food GradePhosphoricAcid – IsraelPhosphoric

Acid (MGA)Commodity Fertilizers

(eg. TSP)

Phosphate Rock

Food Hygiene

Basic Products

Phosphate Salts –

U.S. & BrazilE&FG

PhosphoricAcid –

U.S. & Brazil

FoodAdditives–

U.S. & Brazil

Business acquired fro

m Astaris

# 1 in the world in pure

phosphoric acid

Performance Products

Page 34: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

34 Focused Synergistic Responsible

Astaris Integration

Phosphate Salts

ICL PP (Europe/AP)

Food Additives

PPA

ICL PP (Americas)Thermal Acid

Phosphate Salts

PPA

Acquisition of business & assets of Astaris completed November ‘05 Segment sales of over $1 billion annually A leader in the global specialty phosphates industry

Performance Products

Page 35: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

Financials

Page 36: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

36 Focused Synergistic Responsible

1-9/ 07 1-9/06$ millions

Gross profit

Gross margins

1,038.7

35.9%

828.7

34.3%

Operating income

Operating margins

491.2

17.0%

388.7

16.1%

Financing expenses, net

Taxes on income

34.2

87.7

25.1

105.3

Net income 371.0 283.7

Sales (CIF) 2,889.2 2,418.5

% change

25.3%

26.4%

30.8%

19.5%

Other expenses, net 5.6 (14.0)

1-9/07 Income Statement

Page 37: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

37 Focused Synergistic Responsible

1 Net profit + depreciation and amortization + financing expenses + taxes + one time items 2 Cash flows from operating activities, excluding contribution of securitization and factoring

Strong EBITDA & Operating Cash Flows – YTD $millions,

first nine months

EBITDA1 Cash Flow2

543

640

261

377

0

100

200

300

400

500

600

700

2006 2007 2006 2007

Page 38: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

38 Focused Synergistic Responsible

1,447 1,263

1,405

55

1,245

105

1,162

152

874

238

569

216

602

223

598

196

552

2191,011

172

1998 1999 2000 2001 2002 2003 2004 2005 9/06 2006 9/07

Net financial liabilities Securitization & factoring of receivables

Liabilities due to share acquisitions in 1999–2000:

$250 million

1,447

1,314

1,112

785 825771

1,263

1,4601,350

$millions (end of period)

794

1,183

Net Financial Liabilities*

* Net financial liabilities = credit from banks and other interest bearing debt, minus cash and cash equivalents, investments and short-term deposits, long term financial investments and income-tax deposits.

Page 39: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

39 Focused Synergistic Responsible

($ millions)SalesOperating MarginsNet Income

Company2007% Growth2007200620072006

Chemtura2,9187.5%1.6%1.4%(34.0)(81.0)

Albemarle1,737(2.6%)13.4%5.6%171.180.0

PCS3,80338.6%29.9%22.2%726.8445.8

Agrium3,99916.6%11.6%4.6%269.095.0

Yara16,66023.2%8.7%8.2%665.1514.9

K+S1,23,28410.1%1.2%14.8%5.4257.9

Mosaic24,96634.7%17.0%2.6%550.3(143.5)

Innophos4356.0%9.5%8.5%(1.6)(8.1)

Average3,47516.8%11.6%8.5%6.9%34.2%3

ICL2,88919.5%17.0%16.1%371.0283.7

12.8%311.7%3

Note: The results of the comparable companies were taken from their public reports.

1 Based on an exchange rate of 6.00 NOK/USD and of 1.34 USD/EUR 2 Based on summing of the last three quarters (Mosaic 1st nine months ended in August 31, 2007)

3 Net income margins

Comparable Companies - YTD

Page 40: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

40 Focused Synergistic Responsible

Conclusion

Multi-national company

Vast access to natural resources

Sustainable low cost position high margins

Growing revenues and substantial profitability

Strong cash flows and high dividend yield

Potential cost reduction pending availability of natural gas

Focused synergistic growth strategy

Page 41: Harnessing Nature Creating Value 2nd Annual NASDAQ TASE Israeli Investor Conference November, 2007

Thank You

Visit us at:

www.icl-group.com