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ICL FERTILIZERS - ONE OF THE MOST INTEGRATED FERTILIZER COMPANIES IN THE WORLD
ICL Fertilizers is one of the world’s largest producers of potash and an integrated producer of a variety of products based on phosphate rock, including phosphate fertilizers, phosphoric acid, specialty fertilizers and feed phosphates.
ICL Fertilizers is utilizing its access to abundant, low-cost potash reserves and virtually unlimited open-air stockpiling capacity at the Dead Sea to expand its capacity.
ICL Fertilizers also operates Mifalei Tovala, one of Israel’s largest inland transportation companies.
Production of potash by ICL Fertilizers and Competitors in 2008
* K+S production includes other forms of primary potash
source: IFA, Fertecon 2008, Company Reports and ICL Fertilizer data.
ICL Fertilizers at a Glance
- 2008 Revenues: $4.3 billion (including ~$338 million in internal sales)
- % of ICL Revenues: 57% (external sales)
- Operating Income: $2.2 billion (adjusted)
- Revenues by product segments (external sales): 62% potash; 38% fertilizers and phosphates
- Market Leader: 9% of worldwide production of potash, 2nd largest producer in Western Europe and 3rd largest producer of PK fertilizes and the largest in Europe.
- Major Markets: Europe, Brazil, India, China and Israel
Products
- Potash: 5 million tons produced in 2008 (~9% of world production)
- Phosphate rock: 3.1 million tons produced in 2008, ~84% used in the manufacture of phosphate fertilizers and phosphoric acid
- Phosphoric acid (fertilizer grade - P2O5)
- PK fertilizers (compound potash and phosphate fertilizers)
- Liquid and fully soluble fertilizers (MKP and others)
- Animal Feed additives
Competitive Position
ICL Fertilizers’ competitive edge derives from several factors:
- Access to abundant, low-cost potash reserves and virtually unlimited open-air stockpiling capacity at Israel’s Dead Sea
- Significant unused phosphate rock production capacity
- Location of most production sites comparitively close to seaports
- Well positioned with respect to accessibility to markets in both the West and the East, resulting in lower freight costs and shorter delivery times
- Synergies in production processes with a high utilization of by-products
- Global logistics and customer service capabilities for end-users on five continents
- Extensive well-balanced range of products
Industry Factors and Trends
Reduced demand for grains and fertilizers: after reaching record highs in the third quarter of 2008, demand for fertilizers dropped significantly following the deepening of the global economic crisis and tightened credit markets. The sharp drop in the price of grains has also reduced demand for fertilizers. Distributors have also reduced their purchases of fertilizers following their accumulation of large stocks during 2007 and 2008, until their inventories return to ordinary levels. This decline in demand is likely to persist over the short term.
Slowing industry production: potash producers worldwide have reduced their production activities to match supply to demand. A number of fertilizer manufacturers have also delayed investment in previously announced projects to increase their production capacity.
Historically low global grain inventories: wheat, corn and soy inventory levels are still considered at historical lows and several years of good harvests will be required to bring inventory levels to a level that ensures world food supplies at a low rate of risk. The harvests will require large quantities of fertilizers.
Reduced expenditures for shipping: with the deepening global recession creating excess shipping capacity, marine bulk shipping costs, which represent a significant component of ICL Fertilizers' expenses, have dropped sharply since the third quarter of 2008.
Environmental Activities
ICL Fertilizers invests tens of millions of dollars each year in projects to improve environmental performance at production sites and throughout the production and marketing processes for its products. The segment focuses on minimizing emissions into the atmosphere, establishing absorption and other systems for the treatment of effluents, proper treatment of hazardous substances and responsible management of waste.
ICL Fertilizers also operates training programs for employees in an effort to raise awareness of environmental matters, seminars on environmental protection, and emergency staff drills for handling hazardous materials.
ICL Fertilizers has continued its implementation of a multi-year, multi-million dollar environmental responsibility plan by:
- Installing receptors on potash dryer vents at its Dead Sea Works plant to reduce air emissions from non-point sources
- Switching to the use of low-sulfur fuel at its Sdom power plant
- Implementation of non-focal reduction master plan
- Rehabilitating several mining sites
- Constructing a waste treatment plant at its facility in Zin, Israel
Lowest Cost Potash Producer at Dead Sea
Source: CRU British Sulphur Consultants Division, ICL Estimates.