How much future grain of salt? - K+S Group - K+S … · · 2010-06-10How much future lies in a grain of salt? Salt comes in many varieties. Both potash salt and sodium salt are

K+S Sustainability Report 2006

K+S

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How much future lies in a grain of salt?

Salt comes in many varieties. Both potash salt and sodium salt are essential for

life and provide the basis for healthy growth. For many years, K+S has been one

of the world’s leading suppliers of speciality and standard fertilizers as well as

plant care and salt products.

With our products for agriculture, industry and private consumers we make a

decisive contribution to growth and therefore to the sustainable development

of our world. And thus,we fulfil our corporate goal and mission.

With our 12,000 employees, innovative products, fresh ideas and our compre-

hensive service, we ensure that even one little grain of salt achieves something

important every day.

K+S

Experience growth.K+S Aktiengesellschaft · P.O. Box 10 20 29 · 34111 Kassel · Germany · www.k-plus-s.com



K+S

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K+S



2006 2005 2004 2003 2002

IFRS IFRS HGB HGB HGB

Revenues and earnings

Revenues € million 2,957.7 2,815.7 2,538.6 2,287.8 2,258.5

Earnings before interest, taxes,

depreciation and amortisation (EBITDA) € million 401.1 383.1 289.5 223.7 240.1

Operating earnings EBIT I / EBIT € million 278.0 250.9 162.9 115.7 132.8

Earnings after market value

Changes (EBIT II) € million 361.6 271.7 136.5 - -

Earnings before taxes € million 41.5 259.6 123.4 111.6 113.9

Earnings before taxes, adjusted 1) € million 257.9 238.8 149.9 - -

Group earnings € million 270.8 6) 174.4 86.8 101.3 103.8

Group earnings, adjusted 1) € million 218.1 6) 161.3 103.5 - -

The share

Closing price as of 31 Dec. € 82.20 51.05 39.10 21.76 17.35

Dividend per share 5) € 2.00 1.80 1.30 1.00 1.00

Dividend yield 5) % 2.4 3.5 3.3 4.6 5.8

Employees

Employees as of 31 Dec 3) 11,873 11,012 10,988 10,554 10,536

– of which trainees 620 591 591 550 542

Personnel expenses 4) € million 663.5 671.1 613.3 562.7 531.2

Capital expenditure

Capital expenditure 2) € million 130.5 107.1 131.9 126.6 129.0

Of which capital expenditure on

environmental protection € million 11.4 10.0 10.4 11.3 6.8

Environmental protection

Operating expenses for


Specifi c energy consumption kWh/t of product 382 385 405 464 473

Specifi c water consumption m3 /t of product 6.1 6.2 6.4 7.4 7.6

Specifi c carbon dioxide emissions kg/t of product 73 73 77 89 91

Specifi c sulphur dioxide emissions g/t of product 2 2 2 3 8

1) from 2004 onwards, adjusted for the effect of market value changes for exchange rate hedging transactions; a tax rate of 37.0% is

assumed for adjusted group earnings and for adjusted earnings per share.2) for or in connection with property, plant and equipment and intangible assets.3) workforce including temporary employees (without students and interns) measured on full-time equivalent basis.4) Personnel expenses now also include expenditures connected with partial retirement and early retirement.5) The fi gure for 2006 corresponds to the proposed dividend; the dividend yield is based on the year-end closing price.6) including non-recurrent deferred tax income of € 41.9 million or € 1.02 per share.

Five-year Summary

K+S Aktiengesellschaft

Bertha-von-Suttner-Straße 7

34131 Kassel (Germany)

phone: +49 (0) 561 9301-0

fax: +49 (0) 561 9301-1753

www.k-plus-s.com

Editor

Katja Seeger

Communications

phone: +49 (0) 561 9301-1322

fax: +49 (0) 561 9301-1666

[email protected]

Photographer

Volker Straub,

Kassel (Germany)

Layout

Roberts

Marken & Kommunikation GmbH,

Kassel (Germany)

Printing

Druck- und Verlagshaus

Thiele und Schwarz GmbH,

Kassel (Germany)

Impint

€ million / number of 2006 2005 %

Revenues 1,238.9 1,197.2 + 3.5

EBIT I 158.6 151.8 + 4.5

Capital expenditure 83.8 70.9 + 18.2

Employees 7,550 7,490 + 0.8


Revenues 552.4 541.7 + 2.0

EBIT I 29.2 25.0 + 16.8

Capital expenditure 11.4 12.3 - 7.3

Employees 1,260 1,292 - 2.5


Revenues 556.2 568.3 - 2.1

EBIT I 16.7 14.8 + 12.8


Employees 61 58 + 5.2


Revenues 485.8 398.0 + 22.1

EBIT I 67.6 62.7 + 7.8


Employees 2,194 1,385 + 58.4


Revenues 69.4 56.0 + 23,9

EBIT I 13.8 8.1 + 70,4

Capital expenditure 4,3 3.4 + 26,5

Employees 34 33 + 3,0


Revenues 55.0 54.5 + 0,9

EBIT I 25.4 20.1 + 26,4

Capital expenditure 8.2 6.6 + 24,2

Employees 407 393 + 3,6

Potash and Magnesium ProductsPotash and magnesium crude salts are extracted at

six mines. From this, we produce a large number of

fertilizers; furthermore, we process our raw materials

into products for technical, industrial and pharmaceu-

tical applications.

COMPOIn the consumer area, COMPO carries a premium

assortment of potting soils, plant care products, garden

fertilizers and plant protection products. In the pro-

fessional area, we offer complex fertilizers for special

crops, horticulture, sports fi elds and public green areas.

fertivafertiva distributes the K+S Group’s nitrogenous agri-

cultural fertilizers. We market agricultural fertilizers

produced exclusively for us by BASF and trade in the

goods of other leading European manufacturers.

SaltSalt products of the highest purity and quality are used

as food grade salt, industrial salt and salt for chemical

use as well as de-icing salt applied by winter road clea-

rance services to ensure road safety. Production takes

place in Germany and in other Western European coun-

tries as well as in South America.

Waste Management and RecyclingThe business segment uses caverns and the infrastruc-

ture of active mines. K+S is Europe‘s leading systems

provider of underground waste management ensuring

safe disposal over longer periods of time. In addition,

we offer special solutions that accommodate the re-

cycling wishes of our customers.

Services and TradingThis business segment includes logistics connected

with product handling and the chartering of cargo

ships, CATSAN® granulation as well as our IT, consulting,

trading and analytical services. These services, which

are important for the K+S Group, are made available in

a very effi cient manner and at a price that is more

attractive compared with the market.

Business Segments at a Glance

2006 2005 2004 2003 2002













The share



Dividend yield 5) % 2.4 3.5 3.3 4.6 5.8

Employees




Capital expenditure













Five-year Summary




phone: +49 (0) 561 9301-0

fax: +49 (0) 561 9301-1753

www.k-plus-s.com

Editor

Katja Seeger

Communications

phone: +49 (0) 561 9301-1322

fax: +49 (0) 561 9301-1666

[email protected]

Photographer

Volker Straub,

Kassel (Germany)

Layout

Roberts


Kassel (Germany)

Printing



Kassel (Germany)

Impint


Revenues 1,238.9 1,197.2 + 3.5

EBIT I 158.6 151.8 + 4.5


Employees 7,550 7,490 + 0.8


Revenues 552.4 541.7 + 2.0

EBIT I 29.2 25.0 + 16.8


Employees 1,260 1,292 - 2.5


Revenues 556.2 568.3 - 2.1

EBIT I 16.7 14.8 + 12.8




Revenues 485.8 398.0 + 22.1

EBIT I 67.6 62.7 + 7.8


Employees 2,194 1,385 + 58.4


Revenues 69.4 56.0 + 23,9

EBIT I 13.8 8.1 + 70,4




Revenues 55.0 54.5 + 0,9

EBIT I 25.4 20.1 + 26,4


Employees 407 393 + 3,6





tical applications.






























1

Econ

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Ecol

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Soci

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Table of Contents

Preface

Sustainable Development – An Opportunity and a Challenge

Our Group of Companies

Our Economic Growth


The K+S share

K+S Group strengthened through acquisitions and cooperations

Success through innovative products and processes

Energy prices have risen again

Transport volume grows

Our Responsibility for the Environment

Environmentally friendly facilities and processes

Reuse of closed sites

Emissions trading

Protection of fl ora and fauna

Responsible use of products

Capital Expenditure on Environmental Protection

Figures and notes

Our Commitment to Society

Forward-thinking personnel policy

Training – an investment in the future

Exchange of know-how and experience

Co-determination as a constructive partnership

Our building blocks for company pensions

Occupational safety possesses a high value

Health protection and health care

Consumer protection and advice

Active dialogue with our stakeholders

Sport and culture sponsorship

Our Governance Structures and Management Systems

Appendix

Glossary

GRI Guidelines

Figures

Questionnaire for K+S Sustainability Report

2

4

9

16

161718192123

25

25293132333435

38

38424546474951545762

63

68

68697779

Table of Contents

2

In view of the growing opportunities and risks for the sustained development of our

company, transparent reporting about the economic, ecological and social performance

of the K+S Group plays a decisive role in the communication with our stakeholders.

Our corporate strategy is oriented towards long-term and sustainable growth in the

interest of our shareholders, employees and customers. In the fi nancial year 2006, we

succeeded in generating signifi cantly higher earnings in all business segments. The key

factors behind this success were the overall good demand on our markets, attractive

fertilizer prices, the acquisition of Sociedad Punta de Lobos (SPL), growing waste ma-

nagement markets, the implementation of further effi ciency enhancements as well as

positive effects deriving from currency hedging. We were therefore able to more than

make up for the sharp rise in energy and freight costs. In 2006, K+S Group revenues rose

by 5% to € 2,957.7 billion. EBIT I attained a level of € 278 million, representing a year-on-

year increase by 11%.

The basic principle of sustainable development presents us with an opportunity and a

challenge at the same time. We do not want to be solely measured by our business per-

formance, but also judged in social, ecological and ethical terms. We derive the specifi c

fi elds of action for (our company’s) sustainable development from our core competences

and activities. We contribute to guaranteeing suffi cient food for the world’s increasing

population, aim at the most sparing use of raw materials, exploit business synergies and

have mapped out the way for a future-oriented personnel policy.

Thus, with the acquisition of the Chilean Sociedad Punta de Lobos, the largest salt produ-

cer in South America, we have considerably strengthened our product and service port-

folio. As a producer, we are now also operating outside Europe and entering into a new

dimension in the global salt business.

The economic success of K+S is closely connected with the effi cient application of the

resources available to us in the entire value chain. For example, we meet our demand

for environmentally friendly production by our power stations, which are equipped with

the latest cogeneration systems. In the future, we want to further reduce the burning of

fossil fuels by ongoing improvement of the effi ciency of our power stations and through

the use of alternative energies.

Renewable raw materials are becoming increasingly important in the production of bio-

energy and as raw materials for the industrial manufacture of products. This will parti-

ally replace the use of fossil fuels and thus improve the CO2 balance. We see it as our re-

sponsibility to develop products and application guidelines that can be applied to plants

grown for energy and facilitate the more effi cient use of resources.

Preface

Dear Readers,

3

Demographic and sociopolitical changes combined with changes in the legal environ-

ment constitute a challenge for any personnel policy. In Germany, the requirements of

the future world of work are increasingly having to be met by fewer and, at the same

time, older employees. In order to remain innovative and competitive in the future, we

have paved the way for successful further development with the individual components

of our future-oriented personnel management policies.

In all segments, customers and partners acknowledge the corporate competence of K+S.

Maintaining and further developing this depends on each individual employee acting

with integrity and a sense of responsibility. Within the framework of the compliance pro-

gramme, we established principles of conduct in 2006 that incorporate the most important

fundamental values of the K+S Group’s corporate policy as well as basic legal and ethical

obligations, which every individual employee of the K+S Group must comply with.

Alongside the annual report, our sustainability report is the second pillar of our repor-

ting for the fi nancial year 2006. We have followed the Global Reporting Initiative (GRI 3)

guidelines, which are the established worldwide standard for sustainability reporting.

The report is accompanied by a questionnaire with the help of which we hope to learn

more about the interests of our stakeholders so that we can further increase the useful-

ness of the report. After all, the portrayed events, projects and activities are intended to

enable you to understand the K+S Group.

We welcome the dialogue even with a critical readership, so that we can build up the

trust that is essential to the long-term success of the company. Please treat this report

as an invitation to engage in a dialogue with us. We would be delighted to receive your

questions and comments.

The Board of Executive Directors of K+S Aktiengesellschaft

Dr. Ralf BethkeChairman

Norbert SteinerVice chairman

Joachim Felker

Gerd Grimmig

Dr. Thomas Nöcker

Preface

4

Our corporate strategy is oriented towards long-term and sustainable growth in the in-

terest of all our partners, especially customers, employees and shareholders. The basic

principle of sustainable development – achieving a balance between economic, ecologi-

cal and social goals – presents us with an opportunity and a challenge at the same time.

We derive the specifi c fi elds of action for (our company’s) sustainable development from

our core competences and activities.

• Food for the world’s increasing population

• Conservation of resources

• Business synergies

• Forward-thinking personnel development

Over the past 25 years, the population of the world has grown from four billion to more

than six billion and is expected to increase to about eight billion by 2025. To ensure

its nourishment, agricultural output will have to increase by about 2% per year while

the land available for cultivation worldwide is declining. Increasing urbanisation, espe-

cially in Asia, as well as global climate changes are having a damaging effect on agri-

cultural land. The loss of agricultural land can only be made up for by professional and

more effi cient farming, which, in turn, can only be achieved through the increasing use

of mineral fertilizers.

Because the soil is deprived of important nutrients when crops are harvested, sustain-

able agriculture must ensure that soil fertility is preserved or improved by putting these

nutrients back into the soil. K+S is currently running about 200 fi eld tests around the

globe. They attest to the particular importance of balanced fertilization, which entails

ensuring that all important nutrients are mixed together in the right proportions when

fertilizers are applied. What matters in this respect is not only the absolute quantity of

the fertilizers applied but that the nutrients which are being supplied are accepted by

plants and can be translated into yields and quality.

In addition to light, air and water, plants primarily require nutrients such as ni-trogen, phosphate, potash, magnesium and sulphur in order to grow. The plants absorb these essential nutrients from the soil through their roots. In agriculture, selected crops are grown so that food and raw materials can be obtained from them. However, nutrients are constantly removed from the ecosystem as a result of harvesting. The natural cycle is thus interrupted. Fertilizers close this gap because they contain those nutrients that can be absorbed by plants. They are applied in ag-riculture, but also in gardens, in order to preserve and improve soil fertility.


Food for the world’s increasing population



10

Population (bln)

Population growth and land available for cultivation

Agricultural land in ha per capita

8

6

4

2

0.4

0.3

0.2

0.1

0

1975

1990

2000

2025

Jah

r

1975

1990

2000

2025

Source: FAO

World

Asia

5

The demand for high-quality food and therefore feeds is increasing, especially in Asian

countries. While the ratio of meat to cereals consumption in Western Europe as well as in

North and Latin America over the past 30 years has essentially remained the same, meat

consumption in Asia has more than trebled. Although consumption per capita is still

lower than in western countries, the infl uence on agriculture has been considerable.

Moreover, global agricultural production was again unable to meet demand last year

due to crop losses resulting from weather conditions. Stocks of agricultural products

have again decreased signifi cantly. Thus, for example, within a single year, global grain

reserves fell to their lowest level for 25 years, while stocks of corn too are currently lower

than they have been for 20 years.

An additional impulse to growth is being provided by the further increase in demand for

renewable raw materials. For example, the global production of bioethanol has almost

doubled since 1995 and now stands at 35 million tonnes, while the global production of

biodiesel has even increased by a multiple of almost eight over the same period and now

stands at 3.5 million tonnes.

Alongside traditional food and feed production, the cultivation of plants for renewable

raw materials is developing into a third mainstay of agriculture.

However, there will be no tangible expansion of the land presently used for agricultural

purposes. In 2006, we could already observe how the ratios of land used for individual

agricultural crops are changing. We assume that this trend will continue and that there

will be growing competition for agricultural land used for the production of food and for

raw materials.

However, the economic effi ciency of the bioenergy industry is to a great extent depend-

ent on the development of crude oil prices and the extent of government incentives.

Rising agricultural prices may also impair the competitiveness of bioenergy producers.

The most competitive production locations for the production of bioenergy (especially

bioethanol) are overseas. In Europe, the technological development required for the

production of bioenergy has not yet been completed. Biodiesel and bioethanol are now

facing competition from second-generation forms of bioenergy, such as BTL (biomass

to liquid).



Position: Renewable raw materials

Soybean cultivation in Brazil

6

Essentially, plants grown for energy require the same nutrients as traditional crops. Nev-

ertheless, the production of bioenergy presents a new challenge for fertilizer advice. This

is because far higher yields and more intensive crop rotation periods are aimed for in the

case of plants grown for energy (for example, corn or rape), which also results in a cor-

responding increase in the nutrient requirements of these crops. Furthermore, the culti-

vation of these plants for energy in no way leads to closed nutrient circuits, but requires

specially adapted nutrient and fertilizer management.

Our many years of know-how in the defi nition of fertilizer formulas and agricultural ap-

plication advice is of great benefi t to us in the development of adapted fertilization sys-

tems. In cooperation with universities and companies operating in the area of plant cul-

tivation, we carry out research into the production of biomass raw materials as the basis

for the creation of bioenergy. The aim of these projects is to develop economically and

ecologically sustainable processes for the cultivation and fertilization of plants grown

for energy.

We are also carefully following developments in the green genetic technology fi eld. Until

now, genetically modifi ed plants have been mainly grown in the United States, in Ar-

gentina, Canada, Brazil, China and South Africa. In Europe, and in Germany in particular,

their use is controversial and application is subject to high legal hurdles, and that is why

genetically modifi ed plants are seldom found here. The use of such plants has little im-

pact on fertilizer strategy and consequently on fertilizer consumption, as the nutrient

consumption of such plants is the same as in the case of those cultivated in a conven-

tional manner.

The economic success of K+S is closely connected with the effi cient application of the

resources available to us in the entire value chain. For us, the effi cient and sparing use of

these resources is a duty, a challenge and an economic necessity in view of future genera-

tions. Because we at K+S not only look to tomorrow, but also to the day after tomorrow.

Effi cient use of raw materials

What sustainable development means to us in the context of potash and rock salt min-

ing is the integrated pursuit and coordination of the goals of economic effi ciency, supply

security and environmental friendliness. In view of the world demand for raw materials,

the most sparing use of raw materials must be the objective. We are developing new

deposits using state-of-the-art exploration and extraction processes while using existing

deposits effi ciently and conserving our resources. Our modern online analytics, which we

use both above and below ground, are also a decisive factor in this regard.


The conservation of resources

Position: Green gene technology


Rape – a plant that provides energy

Drilling vehicle in mine

7

Linked to this is the further development of our processing techniques, which has re-

sulted in a consistent reduction in the consumption of specifi c raw materials and energy

at K+S over the past few years. K+S’s patented electrostatic separation process (ESTA®)

for potash crude salts distinguishes itself by its eco friendliness because it uses no wa-

ter. Each tonne of sodium chloride which can be separated in a dry way from crude salt,

represents a saving on water of 4 m3 compared to wet separation. In terms of energy con-

sumption too, this process is defi nitely better than the classical, wet separation meth-

ods. Our claim of environmentally friendly production is also illustrated by our power

stations, which are equipped with the latest cogeneration systems.

Recycling of waste

We are actively contributing to environmental protection with our waste disposal activi-

ties. We use the underground caverns created by mining operations to safely dispose of

waste and remove harmful substances lastingly from the biosphere – a service that no

above-ground landfi ll facility can provide. Further more our underground landfi ll sites

offer the unique possibility to move stored waste back to the surface. The site`s position

plan allows to determine the exact location of any kind of waste. The accurate documen-

tation of the stored waste, including analysis log and samples provides circumstantial

information of the wastes` characteristics. Since 2005 – favoured by substantial rises

in the price of raw materials – we have been increasingly removing waste that contains

valuable substances (e. g. copper, selenium and tellurium) from the underground landfi ll

sites and providing it for recycling.

Intelligent fertilizer systems

Renewable raw materials are becoming increasingly important in the production of

bioenergy and as raw materials for the industrial manufacture of products. This will par-

tially replace the use of fossil fuels and thus improve the CO2 balance. We see it as our

responsibility to develop products and application guidelines, which can be applied in

energy crop rotation and make possible the more effi cient use of resources. In many re-

gions, water has become a limiting factor for agricultural production. We are therefore

addressing the question of how improved effi ciency in the use of water can be achieved

using intelligent fertilizer systems, so that more biomass can be produced for food pur-

poses and as a raw material for energy generation with the same amount of water.



Secure disposal of waste underground

8

Our business segments are closely interlinked in terms of their strategic, technical and

economic aspects. This form of interlinking opens up manifold opportunities: we are of-

fering our customers specialised services and a product range that is oriented towards

needs. In addition, considerable cost savings are achieved in many of our business proc-

esses. Our business model creates value for the shareholders of the K+S Group, value that

is more than just the sum of its parts.


ment constitute a challenge for any personnel policy. In Germany, the requirements of

the future world of work are increasingly having to be met by fewer and, at the same

time, older employees. In order to remain innovative and competitive in the future, we

have paved the way for successful further development with the individual components

of our future-oriented personnel management policies. Needs-based vocational training

and our active promotion of new talent are important investments in our future. Our

employees are continually preparing themselves for the future requirements of profes-

sional life through further training and the gaining of qualifi cations. In future too, we

mainly want to fi ll management positions from our own ranks.


Business synergies

Future-oriented personnel development

Business synergies

Training of IT specialists

Fertilizersand plant care

Complementarybusiness segments

K+S Group

COMPO

Salt Salt

fertiva

Potash and Magnesium Products

Waste Management and Recycling

Services and Trading

9Our Group of Companies

Fertilizer and plant care business sector

Potash and Magnesium Products

In six mines in Germany, the Potash and Magnesium Products business segment extracts

annually approximately 38 million tonnes of potash and magnesium raw salts; from this

we produce approximately 8 million tonnes of products. The vital minerals contained in

our natural raw materials – minerals such as potassium, magnesium and sulphur - are

then processed to produce high-grade mineral fertilizers as well as intermediate pro-

ducts for the manufacture of innumerable industrial products. K+S potash and magnesi-

um fertilizers are used by farmers throughout the world to produce food more effi ciently.

In this way, we make an essential contribution to securing the world’s supply of food and

improving its quality. With a product range that is more varied than that offered by any

other potash producer in the world, the business segment offers its customers a highly

attractive spectrum of products. With a potash segment share of about 13%, the Potash

and Magnesium Products business segment is the fourth-largest producer in the world

and the leading provider in Europe.

Main products and application areas

Potassium chloride

Potassium chloride (MOP) Can be applied universally to all chloride-insensitive crops

and all types of soil

Speciality fertilizers (potash, magnesium, sodium, sulphur)

Korn-Kali Special nutrient combination for almost all crops

Magnesia-Kainite Grassland and forage cropping

Patentkali Chloride-sensitive crops (e. g. potatoes, fruit, vegetables)

Potassium sulphate Chloride-sensitive crops (e. g. fruit, vegetables, tobacco)

ESTA Kieserite Magnesium and sulphur fertilizers for all crops

Epso Top (Epsom salt ) Leaf fertilization, liquid fertilization, fertigation

Thomaskali Fertilizer for crops requiring phosphate and potash with

lime for modifying soil structure

Industrial products

Potassium chloride, Chemical industry (e. g. electrolysis)

approx. 99% KCI

Potassium chloride, Oil and gas exploration (drilling fl uid)

approx. 97% KCI

KaSa K97 + KaSa K99 Feeds

KaSa Mag49 + KaSa Mag98 Feeds

High-purity salts Pharmaceutical and foodstuff industries

Potassium sulphate, Buildings materials industry, other industrial applications

> 95% K2SO

4

Magnesium chloride/sulphate Pulp and paper, detergent and plastics industries, pharma-

ceutical industry, fertilizer industry, de-icing products



www.kali-gmbh.com

10

COMPO

In the consumer area, the COMPO business segment offers a broad range of high-quality

potting soils, speciality fertilizers and plant care products that create the optimal condi-

tions for turning a garden into a paradise. In laying claim to being continental Europe’s

market leader in the home and garden area, COMPO is consistently developing its market

position in Western Europe. In addition to very signifi cant market positions that it has

fi rmly established for a good many years, COMPO has been advancing its further growth

in the plant care segment for some time now. As part of its exclusive cooperation with

Swiss Syngenta, one of the world’s leading manufacturers of plant protection products,

COMPO will already complement its range of plant protection products and pesticides

in the lawn and garden area with further innovative products as of this year already.

Measured in terms of revenues, the COMPO business segment is the leading provider in

continental Europe with its consumer products, holding a share of 20%. In the professi-

onal segment – meaning the agricultural and horticultural application areas – COMPO

is Europe`s innovative and propulsive power and takes by far the leading position in the

fi eld of nitrogenous based fertilizers.


Consumer brands Small packages for home and garden

COMPO Comprehensive assortment of potting soils, fl ower and

garden care products, lawn seeds as well as plant care

Algofl ash Comprehensive assortment of potting soils, fl ower and

garden care products

Gesal, SEM Potting soil, fl ower and garden care assortment for

selected countries and distribution channels

Professional products Special products for use as supplies

Nitrophoska Sulphur-based complex fertilizers for horticulture and

special crops

ENTEC Stabilised fertilizer for agricultural crops, horticulture

and special crops

Floranid Slow-release fertilizers for lawns, sports fi elds, public

green areas and special crops

Basacote Coated slow-release fertilizer for nurseries, ornamental

plants and public green areas

Hakaphos / Kamasol Water-soluble salts / liquid fertilizers for special crop

fertigation



www.compo.com

11

fertiva

The K+S Group’s worldwide marketing and distribution activities relating to nitrogenous

agricultural fertilizers are bundled in the fertiva business segment in form of a trading

business. In addition to light, water, air and other nutrients such as potash, phosphate

and magnesium, nitrogen is indispensable for healthy plant growth; nitrogen is also re-

ferred to as the “motor of plant growth”. The business segment markets the agricultural

fertilizers produced exclusively by BASF. In addition, fertiva also trades in the products

of other renowned manufacturers to a limited extent. fertiva is one of Western Europe’s

major suppliers of nitrogenous fertilizers. Ammonium sulphate, a nitrogen fertilizer con-

taining sulphur, makes the business segment one of the world’s leading providers.


Complex fertilizers

Nitrophoska, Nitrophos Agriculture (nutrients: nitrogen, phosphate, potash, magne-

sium, sulphur, depending on needs and applications)

Straight nitrogen fertilizers

Calcium ammonium nitrate Agriculture

Ammonium nitrate Agriculture

ass (ammonium sulphate nitrate) Agriculture (nitrogen sulphur fertilizer)

Ammonium sulphate

Ammonium sulphate Agriculture, raw material used in complex fertilizer

industry and for bulk blending

Salt is an omnipresent element of our lives. It aids our health, is used for seasoning,

dyeing and disinfecting and, on top of that, has numerous other applications. It is

indispensable for ensuring road safety and is an important component in the production

of glass, paper and synthetic materials. In a nutshell: Our lives are unimaginable with-

out salt.

A New Dimension in the Salt Business

Through esco – european salt company and Chilean Sociedad Punta de Lobos (SPL), which

we acquired in 2006, we offer our customers an extensive and attractive product range.

esco and SPL sell a total of more than 10 million tonnes of salt products annually and

also possess considerable capacity reserves that are primarily used for the particularly

reliable supply of winter road clearance service products to customers.

Salt business segment



www.fertiva.com

www.spl.cl

www.esco-salt.com

12

With three rock salt mines, three brine plants as well as several evaporated salt facilities,

esco is Europe’s largest supplier of salt. Our deposits were formed in the Upper Permian

Zechstein period, more than 230 million years ago. At about 99%, the purity of the salt

extracted underground is very high and occupies a leading position among the compe-

tition in Europe. esco’s annual production capacity amounts to about 8.6 million tonnes

of crystallised salt.

Main products and application areas – esco

Food grade salt

Sonnensalz, Feine Prise, Private households

Cérébos, Vatel,

Pretzel salt Food processing industry

Pickling salt Food processing industry (meat/sausage)

Other food grade salts Food processing industry (e. g. bread, cheese, canned food)

Industrial salt

Axal, Regenit Water softening

Dishwasher salt Private households

Salt lickstones, SOLSEL Feed

Feed salt Feed

Fishery salt Preserving of fi sh

Hide curing salt Tanneries

Pharmaceutical salt Medicines, infusion solutions

Other industrial salts e. g. drilling fl uids, dyeing works, leather treatment, pottery

Salts for chemical use

Salt for chemical use Chemical industry

De-icing products

De-icing salt, magnesium Winter maintenance services, public road authorities

chloride solutions

anti-rutsch De-icing salt for private households

With the acquisition of Chilean salt producer Sociedad Punta de Lobos, the Salt business

segment possesses open-cast production sites in Chile and Brazil. In Chile, rock salt is

extracted in the Salar Grande region of the Atacama desert. The enormous salt reser-

ves in this deposit are suffi cient to supply the population of the world with salt for the

next 5,000 years. Annual production capacity amounts to six million tonnes at present.

The company Salina Diamante Branco operates a sea salt facility with annual capacity

of 450,000 tonnes in the northeastern part of Brazil. SPL is South America’s largest salt

producer; the main areas for sales are South America and the east coast of North Ameri-

ca. On the Chilean market, the company is the market leader with its consumer products

marketed under the “Sal Lobos” brand.



13

Main products and application areas – SPL

Food grade salt

Sal Lobos, Marina, Private households

Biosal (50% less sodium)

Salt with spices Private households

Other food grade salts Food processing industry

Bath Salt

Termasal Private households

Industrial salt

Blusal Water softening

Pharmaceutical salt Medicines, infusion solutions

Other industrial salts e. g. Textile industry

Salts for chemical use

Salt for chemical use Chemical industry

De-icing products

De-icing salt, magnesium Winter maintenance services

chloride solutions

Blizzard Wizard, Halite De-icing salt for private households

Waste Management and Recycling

We offer lasting solutions that meet market needs using modern waste management

and recycling systems. The Waste Management and Recycling business segment is the

technological leader in Europe for the provision of underground waste management en-

suring the safe disposal of contaminated waste over longer periods of time. With regard

to underground waste management, we are the largest service provider in Europe in

terms of volume and revenues. However, the market is being fought over by numerous

suppliers of disposal services for special waste both above and below ground level; we

are able to defend our position successfully with particularly customer-oriented disposal

solutions. In the case of recycling salt slag from the secondary aluminium industry too,

we are a leading provider in Germany and in the rest of Europe.

Services and Trading

The Services and Trading business segment pools service activities that are particularly impor-

tant for the K+S Group such as logistics, IT and analytics. These services are also offered to third

parties to a limited extent. We deliberately expose these activities to competition to ensure

quality of service for the K+S Group and its partners that is always cost-effective and meets

market standards. In addition, this business segment also includes the granulation of animal

hygiene product CATSAN® for Masterfoods and trade in chemicals engaged in by CFK.

Complementary business segments


Complementary business segments

www.ks-entsorgung.com

www.ks-consult.com www.kalitransport.com

www.dataprocess.de www.cfk-gmbh.com

14

For the most part our production sites are located in Europe, particularly in Germany,

which is also a consequence of the location of our deposits in the Potash and Magne-

sium Products and Salt business segments. About 84% of our employees are based in

Germany and 9% of our employees in other European countries. Through the acquisition

of Chilean salt producer SPL, production sites in South America now also belong to the

K+S Group and the percentage of employees overseas has risen accordingly to 7%. We are

globally active through our effi cient sales and distribution network, which keeps us close

to our customers. In selected target markets, distribution is organised through joint com-

panies or distribution platforms in such a way that a competent approach to attending

to customers is ensured there too.

USA1 New York2 Clarks SummitMexico3 Mexico CityBrazil4 Galinhos5 Sao Paulo6 FlorianópolisChile7 Santiago de Chile

Argentina8 Buenos AiresSingapore9 SingaporeChina10 ShenzenSouth Africa11 Johannesburg

Overseas

1

3

5

67

2

4

11

8

9

10


Our Sites

Our Sites

Waste Management andRecycling business segment


fertiva business segment

Potash and MagnesiumProducts business segment

COMPO business segment Salt business segment

Services and Tradingbusiness segment

15

Germany1 Kassel

2 Heringen / Philippsthal /

Unterbreizbach

3 Neuhof

4 Wunstorf-Bokeloh

5 Sehnde-Ilten

6 Zielitz

7 Münster

8 Krefeld

9 Uchte

10 Gnarrenburg

11 Mannheim

12 Hanover

13 Grasleben

14 Bernburg

15 Rheinberg

16 Staudt

17 Hamburg

18 Rostock

19 Linden

20 Magdeburg

21 Langelsheim

22 Bad Salzdetfurth

23 Cologne

France24 Reims

25 Wittenheim

26 Le Teil

27 Pré en Pail

28 Onet le Châuteau

29 Roche-lez-Beaupré

30 Château Renault

31 Levallois-Perret

32 Dombasle

33 Bayonne

Italy34 Verona

35 Cesano Maderno

36 Ravenna

Spain37 Barcelona

38 La Vall d’Uixó

39 Torrelavega

Portugal40 Povoa

41 Alverca

42 Olhão

Switzerland43 Frauenkappelen

44 Allschwil

The Netherlands45 Breda

46 Harlingen

Belgium47 Deinze

48 Brussels

Great Britain49 Hertford

Denmark50 Hvidovre

Sweden51 Göteborg

Latvia52 Livani

Czech Republic53 Prague

Poland54 Poznan

Austria55 Vienna

Greece56 Marousi / Corinth

EUROPA

24

25

26

27

28

2930

31 32

33

3435

36

37

38

39

41

40

42

43

44

45

46

4748

49

51

50

52

53

55

54

56

Hamburg

Erfurt

Frankfurt

1

2

3

4

5

6

7

8

9

10

11

12

13

14

16

17

18

19

20

Berlin

Munich

CologneKassel

23

21

2215

Europe


Our Sites

16

At € 2.96 billion, revenues rise 5% year on year

We posted revenues of € 2,957.7 million for the fi nancial year 2006, up 5.0% year on year.

The rise in revenues primarily resulted from the fi rst-time inclusion of the SPL Group

in the Salt business segment as of 30 June 2006; this produced a consolidation-related

increase in revenues of € 81.9 million. In addition, price increases impacted positively

on revenues, so that volume-related factors could be more than made up for. While the

Potash and Magnesium Products, fertiva and COMPO business segments were able to

grow their revenues mainly by means of higher fertilizer prices, the Salt business seg-

ment, in addition to the consolidation effect mentioned above, was able to post gains for

industrial salts and salts for chemical use in particular.

K+S Group Key Financial Datain € million 2006 2005 %

Revenues 2,975.7 2,815.7 +5,0

Operating earnings (EBIT I) 278.0 250.9 +10.8

Earnings before income taxes, adjusted 218.1* 238.8 +35.2

Capital expenditure** 130.5 107.1 +21.8

Employees 11,873 11,012 +7.8

* including non-recurrent deferred tax income of € 41.9 million or € 1.02 per share

** for or in connection with property, plant and equipment and intangible assets

Revenues overseas increased

The Potash and Magnesium Products business segment generates the highest revenues

of all the K+S Group’s business segments, accounting for about 42% of total revenues,

and is followed by fertiva, COMPO and Salt. In Europe, we achieved revenues of € 2,121.5

million. The region thus accounted for more than two thirds of total revenues. The Eu-

ropean market is very important for us because we can leverage shipment costs advan-

tages. Revenues generated on overseas markets rose by 27% to a total of € 836.2 million,

which means that the share of revenues accounted for by them rose by just under fi ve

percentage points year on year.

Operating earnings (EBIT I) increase by 11% to € 278.0 million

At € 278.0 million, operating earnings (EBIT I) were up € 27.1 million or 11% on last year’s

fi gure (2005: € 250.9 million). All the business segments managed to achieve an improve-

ment year on year. The increase in earnings is mainly attributable to higher prices for stand-

ard and speciality fertilizers as well as the fi rst-time inclusion of the SPL Group in the Salt

business segment. It was possible to more than offset countervailing trends in costs.

Capital expenditure increase by 22%

In 2006, we invested a total of € 130.5 million in property, plant and equipment and

intangible assets, about 22% more than in the previous year. Measures relating to replac-

ing and safeguarding production account for most of this amount. At the end of the year,

there were capital expenditure obligations relating to uncompleted investment under-

takings totalling € 9 million.

Our Economic Growth


Our Economic Growth


Salt 16.4

Revenues by segment(in %)

Waste Management and Recycling 2.3

Services and Trading 1.9

fertiva 18.8

COMPO 18.7

Potash and Magnesium Products 41.9

Germany 23.6

Revenues by region(in %)

Rest of Europe 48.1

Overseas 28.3

17

Econ

omy

K+S share gains 61% during the year under review

After having already gained about 30% in 2005, the K+S share continued to display a posi-

tive trend from the beginning of 2006 too. As of the middle of April, its price even began to

rise at a faster pace. Following the publication of fi gures for the fi rst quarter that were in

line with capital market expectations on the occasion of the Annual General Meeting held

on 10 May 2006, profi t-taking set in. This was exacerbated by rising fears over infl ation and

interest rates worldwide. However, the K+S share received a further boost in the third quar-

ter. On the one hand, Belarusian and Canadian potash producers reached agreement with

their Chinese customers on price increases for potash fertilizers, which had a signalling

effect for developments on the global potash market. On the other hand, Russian potash

producer Uralkali had to abandon a mine because of a leach infl ow. Against the backdrop

of the resulting supply shortage as well as the anticipated marked increase in demand for

potash fertilizers, the capital market expects potash prices to rise further in 2007.

Our share was quoted at € 82.20 at the end of 2006, the highest level in its history. This

represents an increase of 61% in terms of performance over the course of the year. If the

dividend paid is also taken into account, the gain even amounted to 64.5%. The perform-

ance of the K+S share over the course of the year was 32 percentage points better than

that of the MDAX and even 39 percentage points better than that of the DAX. On 28 Feb-

ruary 2007, the K+S share was quoted at € 81.25. This means that the price of our share

was up by 0.8% on the end of 2006.

BASF AG holds about 10% of our shares. Furthermore, on 3 February 2006, we were

informed by the investment company Prudential and its subsidiary M&G Investment

Management that their holdings amounted to 5.2% thus exceeding the 5% threshold. On

17 November 2006, Capital Group informed us that it holds about 5.2% of K+S through

its subsidiary Capital Research & Management. Under the free fl oat defi nition applied by

Deutsche Börse AG, the free fl oat amounts to just under 90%.

We pursue an earnings-based dividend policy. As a result of the increase in earnings,

the Board of Executive Directors and the Supervisory Board will propose increasing the

dividend again for the fi nancial year 2006 to the Annual General Meeting. The proposed

dividend will amount to € 2.00 and will therefore be 20 cents or 11% higher than the

previous dividend payment.

Our Economic Growth

The K+S share

The K+S share

80

100

120

140

160

180

Source: Bloomberg

31. D

ec. 0

5

31. J

an. 0

6

28. F

eb. 0

6

31. M

arch

06

30. A

pr. 0

6

31. M

ay 0

6

30. J

un

e 06

31. A

ug.

06

30. S

ep. 0

6

31. O

ct. 0

6

31. D

ec. 0

6

31. J

an. 0

7

30. N

ov. 0

6

31. J

uly

06

28. F

eb. 0

7

K+S

DAX

MDAX

Performance of the K+S share in relation to the DAX and MDAX in 2006 (indexed)(Performance in %)

K+S Annual General Meeting

18 Our Economic Growth


Value added

The value added statement sets out the difference between the output of the company

and the value of the necessary inputs. In 2006, the value added of the K+S Group was

€ 1,016.5 million. At about 65% or € 663.5 million, the largest share went toward our

employees in the form of wages and salaries, social insurance contributions and con-

tributions to pension provision. With the dividend of € 1.80 per share, our shareholders

received a total of € 74.2 million. The public sector received € 70.7 million and donors

€ 11.3 million. The remainder of € 196.5 million was retained for the purpose of the in-

ternal strengthening of the Group.

Further information about our fi nancial data can be found in our 2006 Annual Report.

K+S wants to continue to grow and to strengthen its international competitive position

also through external growth. We are dealing in very concrete terms with acquisition

projects, equity investments and cooperation arrangements in our current business sec-

tors. In this respect, our fi nancial strength gives us numerous opportunities to act which

we will take prudently.

For the second time in a row, we have been awarded the title of “Strategist of the Year” for our clear growth strategy. The title, awarded by Financial Times Deutschland, the WHU Graduate School of Management and the strategic consultancy Bain & Company, is awarded annually to especially far-sighted and successful companies.

A new dimension in the global salt business

In April 2006, K+S acquired Chilean salt producer Sociedad Punta de Lobos S.A. (SPL) with

economic effect from 30 June. SPL is South America’s largest salt producer and achieved

revenues of about US$ 350 million in 2005. K+S acquired 99.3% of the shares of SPL for a

purchase price of US$ 477 million ( just under € 390 million). The sellers were a group of

Chilean private shareholders and CVC International, a Citigroup investment company.

With the acquisition of SPL, K+S has assumed a new role in the global salt business and

extended its salt activities, which have hitherto focussed on Europe. SPL, which has one

of the most attractive cost structures of any salt producer worldwide, enjoys excellent

competitive positions. The further growth of South America as an economic region and

the continued industrialisation of Asia in particular will create new, promising opportu-

nities for the K+S Group through SPL. K+S is now the leading producer on the European

salt market. Thus, SPL is an ideal strategic complement for the K+S Group.


Extraction of salt in the Atacama Desert, Chile

19

Econ

omy

Our Economic Growth


SPL’s main sales areas are South America and the North American East coast. On the Chil-

ean market, the company is the market leader with its consumer products marketed un-

der the “Sal Lobos” brand and, in addition, it supplies the entire region of South America

with a broad assortment of rock and sea salt products. De-icing salt as well as industrial

salt and salt for chemical use are mainly exported to North America.

SPL extracts rock salt in an open-cast mine at the Salar Grande in the Atacama desert.

Because of the excellent quality of the crude salt it can be further processed into many

speciality products for all application areas. The deposit extends over more than 500 km2

and has a thickness of up to 100 meters. The processed salt is loaded directly onto ships

at a company-owned port facility located nearby. Annual production capacity amounts

to a good 6 million tonnes. Since 2003, Brazilian sea salt producer “Salinas Diamante

Branco”, which operates a plant with an annual capacity of 400,000 tonnes in the north

of the country, has belonged to SPL. In addition, SPL has a shipping company of its own

in Empremar S.A., Chile, as well as a U.S. distribution company, ISCO. SPL is seated in San-

tiago de Chile. The SPL Group employs 771 people at its production plants, distribution

companies and logistics units.

In addition, SPL began expanding its port on the Chilean coast in the second half of 2006.

The project aims to double loading capacity to about 10 million tonnes and is to be com-

pleted in the second half of 2007.

A successful start has been made on further projects to integrate SPL with the K+S Group.

They include the transition to IFRSs accounting standards as well as the integration of

SPL with our tried and tested IT infrastructure. In the meantime, a working party that

consists of SPL and esco employees has been established to identify further opportuni-

ties and synergies on international markets.

K+S is constantly working on the development of new products and nutrient combina-

tions that meet the nutrient needs of individual crops even better and satisfy our cus-

tomers’ requirements in terms of products of the highest quality. The Potash and Mag-

nesium Products, COMPO and fertiva business segments have systematically expanded

their product range over the past few years in close cooperation with BASF’s Limburger-

hof agricultural centre.

In 2006, the Potash and Magnesium Products business segment has introduced the

“KaSa” feed line. We offer feed producers high-quality potash feed supplements, which

in part also contain a magnesium sulphate component.


Sea salt extraction site in Brazil

20

Cooperation between COMPO and Sygenta is already bearing its fi rst fruit. With the in-

secticide “COMPO AxorisTM Insekten-frei”, the fi rst step has been taken on the way to

jointly developing a complete range of plant protection agents for hobby gardeners. The

new COMPO products (sticks and granulate) effectively combat pests such as greenfl y or

cicadas on house or balcony plants faster and for longer than comparable products from

our competitors – for up to 16 weeks. The innovative insecticide contains the substance

thiamethoxam, a new development on the part of Sygenta research. Thanks to its own

laboratory, COMPO has quickly formulated the substance, combined with added ferti-

lizer, as a user-friendly stick and presented it punctually on the shelves of home improve-

ment and garden centres at the start of the 2007 gardening season.

With COMPO SANA water-storing potting soil, introduced for the 2006/07 season,

COMPO offers the hobby gardener maximum plant care with the utmost convenience.

The aqua deposits it contains guarantee that the plants will be supplied with water

for far longer. The water-storing soil saves up to 50% of watering work, makes up for

irregular watering intervals and ensures a rapid re-moisturization of the soil. COMPO

Aqua-Depot absorbs surplus irrigation water as a water reservoir, stores it and supplies

it to the plant roots when necessary; this all helps to save water.

COMPO’s active involvement in the development of innovative product and packaging

concepts was rewarded last year when the liquid fertilizer SEM was named Product of

the Year by the “Management Europe Meeting”. Moreover, the COMPO liquid fertilizer

bottle has been nominated for the 2007 German Design Award. Previously, the bottle

has already received the “IF Design Award” in Hanover, one of the world’s three most

important design competitions.

fertiva and the Leverkusen-based chemical company Lanxess have extended the existing

contract for the supply of ammonium sulphate for a further ten years – thus confi rming

a tried and tested partnership. Moreover, we are investing € 5.4 million at the Lanxess

site in Antwerp to enable us to offer our customers two different grades of ammonium

sulphate fertilizer in the future. Thus, apart from offering fi ne-grained products, fertiva

will also be able to offer coarse-grained ammonium sulphate that will largely be used in

composite fertilizers. In this way, the K+S subsidiary is thus capturing an interesting new

market segment. The plant should go into operation in the middle of 2007; at this point

in time, the new 10-year supply contract will come into effect.

Following the launch by esco in 2004 of a new generation of animal salt lickstones under

the name SOLSEL, the range was further diversifi ed last year. The production programme

now also includes lickstones with vitamin supplements and mineral stones, which are

matched to the trace element needs of different animal species and thus protect graz-

ing animals against the effects of poor nutrition. Moreover, on behalf of a French sports

goods manufacturer, we have developed a 5 kg lickstone that can be retailed on the horse

feed market and thus opened up what is a new sales channel for us.

Our Economic Growth


COMPO presents the new insecticide Axoris at the gafa trade fair

Salt lickstones – an ideal nutritional supplement

21

Econ

omy

Joined production creates synergies

Fertilizers are produced exclusively for fertiva and COMPO at BASF’s up-to-date produc-

tion facilities in Antwerp and Ludwigshafen. During joint monthly production planning,

in addition to fulfi lling market requirements the team also focuses on operating the fa-

cilities at optimal cost. The pooling of competencies guarantees high-quality production

planning, good market supply and timely deliveries to customers. The planning team

can respond fl exibly to sudden changes in the markets and adjust the production pro-

gramme. In addition, the team can identify and exploit optimisation potential faster.

Joint use of facilities results in higher utilisation, thus yielding a reduction in unit costs.

Various formulas are also used jointly, so that customers profi t from a broader product

programme.

The manufacture of our products, especially of our fertilizers, is comparatively energy-in-

tensive (see page 35). In 2006, we recorded a signifi cant rise in energy costs of a good 32%

to € 207,5 million, as the average world market price for natural gas further increased.

We are seeking to counteract this trend by means of long-term price agreements as well

as through other forms of sourcing energy.

The production sites in the Potash and Magnesium Products business segment use co-

generation systems and only need to make limited additional purchases of electric pow-

er, since the steam provided for potash production is also used to generate electricity.

The power stations and drying plants are powered by natural gas. Thanks to successful

optimisation measures, the effi ciency of our power stations is now more than 90%. The

prices of the supplied natural gas are linked to the price for heavy heating oil, so that

increases in the price of crude oil indirectly affect the purchase price for natural gas. To

keep energy costs on as low a level as possible, we constantly review the technical pos-

sibility for improving our facilities and invest in new technology. For example, to improve

the energy balance at the Werra and Zielitz plants, we have installed an additional gas

turbine each before the drying facilities in order fi rst to obtain electricity and then to

carry out the product drying using the waste gas from the gas turbines instead of direct

natural gas fi ring. In addition, we are seeking to pool the gas purchases of various plants

to achieve volume advantages from suppliers.

Our Economic Growth



Modern gas turbines at the Zielitz site

22

Following a change in the waste legislation in Germany, since 2005 no untreated waste

may be stored in above-ground landfi ll facilities. The consequence: there is a lack of disposal

capacity for several million tonnes of waste, the disposal costs for the environmentally friendly

recycling of waste are rising and, in many cases, waste can no longer be disposed of close

to its source. The administrative districts of North Hesse are also affected by this problem.

At the Wintershall site in Heringen, the BKB AG, part of the E.ON Energy group, has

planned a heating plant, which will provide most of the energy needed for the site. The

incineration of waste will produce steam and thereby reduce K+S’s annual consump-

tion of natural gas considerably from 130 million m3 to 60 million m3. As fuel, the plant

uses domestic and commercial waste, which has a high calorifi c value and saves valuable

energy reserves. From the perspective of effi cient energy generation, the plant, working

together with the Wintershall power station through cogeneration, will take a top posi-

tion in Germany. The particular advantage for BKB is that it has found a partner in K+S,

which ensures the continuous purchase of the generated steam. Hence this plant has a

defi nitely higher effi ciency level than plants which are only meant for power generation.

BKB and K+S have agreed on long-term cooperation, which will guarantee the site price

stability in the supply of steam for 15 years. This means that the supply of energy will

be partly independent of future increases in the price of natural gas and the Heringen

industrial site will be strengthened.

The fuels used in the heating plant contain approx. 40 to 60% organic material and burn

CO2-neutrally. The released carbon dioxide is not additionally discharged into the atmos-

phere but was removed from the atmosphere through the growth of wood and biomass.

The CO2 emissions that pollute the climate due to the combustion of fossil fuels are

therefore signifi cantly reduced.

The fl ue gas cleaning process used in the planned Heringer plant is recognised as “best

available technology” by the European Union. With the process employed, the plant will

remain considerably and permanently below the stringent limit values of the 17th Ger-

man Ordinance on the Combustion of Waste and Similar Combustible Materials. In addi-

tion to this, online measurement will provide constant information about the discharged

emissions. An emissions forecast created by an independent assessor on behalf of the

approving authority revealed that, for all air pollutants, the emissions are so low that

they do not constitute a danger to human health or impair particular protective values

of the environment. Furthermore, the possibility would exist to dispose of the occurring

fl ue gas cleaning residues in our near-by underground facilities at Herfa-Neurode.

Nevertheless, the project is subject to controversy in the region. We take the fears and

anxieties of the population very seriously. We have therefore provided information about

the planned construction of the waste-fed heating plant at a very early stage and will

continue to report on its progress openly and transparently. In addition to issuing in-

formation to the press and fl yers, we have strengthened our personal dialogue with all

groups concerned, especially in the Werra valley.

Our Economic Growth


Position: Wintershall heating plant

Werra plant, Wintershall site

23

Econ

omy

For COMPO and fertiva, direct energy costs play a secondary role . The infl uence of the

gas price on materials costs is much more important as natural gas is required to pro-

duce ammonia, the most important base material for the production of nitrogen fertiliz-

ers. Since the middle of 2000, the production costs of ammonia have essentially tripled

from under US$ 100 per tonne to more than US$ 300 per tonne.

At esco, higher energy costs produce a signifi cant rise in production costs, especially in

the case of energy-intensive evaporated salt products. We want to make up for this in

the future through the more effi cient utilisation of energy in our salt evaporation plants

and the use of alternative forms of energy. In the summer of 2006, a new biogas plant

was put into operation in direct proximity to the Braunschweig-Lüneburg salt works

in Gasleben by a group of investors consisting of four farmers. The electricity created

there is fed into the local mains and thus benefi ts the households of the municipality of

Helmstedt. The heat generated in the biogas plant, however, is used by the salt works.

By utilising this alternative energy, the plant north of Helmstedt can cover its own heat

requirements in the summer and need now only resort to natural gas in winter. The heat

energy costs of the site can thus be almost halved.

At the Dutch Frisia Zout location, we are planning to obtain power and steam from the

substitute fuel plant as of 2009, which will bring about a signifi cant reduction in energy

costs. The plant not only solves a disposal problem in the region, but also improves the

CO2 balance.

The K+S Group shipped 34.2 million tonnes of goods last year. Wherever possible, we

transfer shipments from road to rail and waterways, which in the meantime account for

more than two thirds of the volume shipped.

As a result of economic growth in Asia, especially in China, demand for shipping capacity

has risen to such an extent that until now it could not be offset by investments in new

ships. Therefore we are making increased use of containers to counteract the effects of

steep increases in the cost of sea freight for bulk fertilizers; this mainly applies to the

supplying of Asian markets. Thus, in 2006, we shipped 60.887 containers with over 1.6

million tonnes of products overseas - this is an increase of 28% over the previous year.

K+S has not been able to completely escape the worldwide increase in freight costs. In

2006, our freight costs rose by 18% year on year to € 464.7 million. However, this increase

is mainly a consequence of higher sales, in particular of de-icing salt, and of the increased

transport of potash products overseas.

Our Economic Growth



Biogas facility at Grasleben

Unloading of containers in Asia

24

Transport volume by carrier in millions of tonnes* 2006 2005

Road (lorry) 10.8 8.9

Rail 9.3 9.0

Seagoing ship 8.9 8.5

Inland waterway ship 4.1 4.4

Pipeline 1.1 1.1

Total 34.4** 31.9

* The logistics tonnage includes double fi gures on account of transport chains (e. g. from rail to inland waterway to

sea). It does not include external business or goods tonnage shipped by the K+S Group for third-party customers.

** The transport volume of SPL will be included from 2007

Supply chain optimised

In 2006, all K+S companies strengthened their supply chain management in terms of

both personnel and structure as they pursued the goals of cost minimisation and inno-

vative design of the supply chain. We want to achieve logistical improvements all along

the value creation chain – from the coordination of raw materials supply through the

individual production steps to the sales organisation. Our goals include not only the

lowering of costs and greatest possible exploitation of potential synergies, but also the

optimisation of customer service. High product quality, punctual delivery, excellent ser-

vice and the smooth processing of documents must all go hand in hand.

K+S is continuing its long-term cooperation with Railion, Europe’s leading rail freight company. Right on time for the signing of a contract between the two com-panies in February 2007, a 185 series goods train engine built in the Kassel plant of the locomotive specialist Bombardier has been f itted out with a K+S design. The routes travelled by the express train, which can run at speeds of up to 140 kilometres an hour, includes the Werra – Hamburg, Zielitz – Hamburg and Bernburg – Wismar lines. Depending on the topographical conditions, the locomotive can pull whole trains with a maximum total weight of just over 1,800 tons of K+S goods. In the past year, Railion has transported around eight million tons of goods for K+S on the railways; that is the equivalent of about 6,000 regular and special trains.

Our Economic Growth


Innovative supply chain organisation

25

Ecol

ogy

At all our domestic and foreign sites, we are committed to production and business activ-

ity that is safe and minimises harm to the environment. This involves saving of resources,

limiting emissions and avoiding waste.

ESTA®process

The electrostatic separation process (ESTA®) for potash crude salts, patented by K+S,

distinguishes itself by its eco friendliness because it uses no water and has far more

economical energy consumption. Each tonne of sodium chloride (residue) which can be

separated in a dry way from crude salt, represents a saving on water of 4 m3 compared

to wet separation. Also in terms of energy consumption, this process is defi nitely better

than the classical, wet separation methods. The ESTA® process permits excellent resource

utilisation. At the Sigmundshall site, only this process has made it possible to economi-

cally exploit the Kieserite contained in hard salt – with the simultaneous extraction of

the potash component -, thus increasing the lifespan of the site. Potash is also processed

at ESTA® facilities in operation at the Wintershall and Hattorf sites on the Werra river as

well as in Neuhof-Ellers – almost half of the crude salt mined by the Potash and Magne-

sium Products business segment.

Since the mid-1950’s, the German potash industry has been conducting intensive re-search into the dry sorting of salt minerals. Since the 70’s, the ESTA® process has been providing a practical technique for the electrostatic separation of crude salts. In the ESTA® process, the salt minerals in the crude salt are separated using an elec-trical voltage f ield. This process utilises the different electrical properties of the surfaces of individual salts. When they fall through high-voltage f ields, the posi-tively charged particles are diverted in one direction and the negatively charged particles in another, and each caught separately.

Top energy effi ciency thanks to cogeneration

A large number of processing steps are required for the manufacture of our speciality

and standard fertilizers as well as salt products. The energy required for the produc-

tion process – electricity and heat – is fuelled almost exclusively by natural gas. Only

for room heating purposes heating plants are used to a modest extent using light fuel

oil employed.




Ground crude salt

Pretreatment

Separation

Residue(NaCl)

Concentrate(KCl and Kieserit)


26

Many sites have their own power stations, equipped with state-of-the-art cogeneration

plants. At the Neuhof-Ellers and Zielitz sites as well as at the Werra Verbund plant, we

have introduced calorifi c value technology. The residual heat from power station waste

gas is used to warm up boiler feed water or to heat the haulage shaft. Thanks to success-

ful optimisation measures, the effi ciency level for our power stations exceeds 90% in the

meantime. Our sites are operating so effi ciently that, given the current state of tech-

nology, even further capital expenditure could hardly yield additional tangible reduc-

tions in emissions. For years now, these facilities have been contributing signifi cantly to

the German climate protection goals. Since 1996, we have been a partner in the volun-

tary self-obligation to climate protection agreed upon between the Federal Government

and German industry and have formed environmental alliances in several of Germany’s

federal states .

Safe waste disposal for the long term

The Waste Management and Recycling business segment operates two underground

landfi ll sites (Herfa-Neurode and Zielitz) and four underground reutilisation facilities.

The waste stored is separated lastingly from the biosphere – a service that no landfi ll

facility can provide. As it is guaranteed that there is no follow-up maintenance, there are

no long-term decontamination or maintenance costs. There can be no negative impact

of the waste stored on people and the environment.

The salt rock is completely impervious to gas and liquids and ensures that the waste is

completely sealed off. The salt deposits are covered with waterproof layers of clay which

safely separate the salt lying underneath from the soil layers containing ground wa-

ter. When a site is shut down, its shafts are made watertight and sealed off safely over

the long term. The fact that our system is an example of state-of-the-art science and

technology in the long-term closing up of shafts has been demonstrated by a research

project at the Salzdetfurth site promoted by the German Federal Ministry of Education

and Research.

The reutilisation facilities are approved under the terms of mining legislation, and the

waste storage facilities under the terms of waste legislation. All facilities comply with EU

legislation and with the waste disposal and stowing directives. As part of the extensive

approval procedures, the geological, hydrogeological, mining technical and geomechani-

cal suitability of the sites was proven. The sites are regularly inspected by state regula-

tory bodies, have been certifi ed as professional waste disposal sites, and possess certifi ed

QM systems.



27

Ecol

ogy

Disposal of waste

Suitable for underground disposal are inorganic toxic waste products, which may

not be explosive, spontaneously combustible, radioactive, gas emitting, or indepen-

dently fl ammable. Neither free liquids may be stored nor any solid substances that could

cause a chemical reaction with the salt rock. Substances suitable for storage are, for ex-

ample, incinerated residues, arsenic or mercury-containing waste, salts containing cya-

nide, condensers as well as contaminated soil and construction waste. If necessary, we

can move stored waste back to the surface in order to recycle the reusable materials

it contains.

Given the current quantities of waste to be stored annually, the caverns that have been

approved for storage at the two underground facilities are suffi cient for several decades.

Because of the mining of potash, further caverns are coming into existence all the time,

and these may also be used for waste storage once they have been granted the necessary

approval.

Reutilisation of waste

In contrast to disposal, the objective of reutilisation is to make use of the waste. Approved

non-mining waste is exploited for the purpose of fi lling suitable caverns. The waste reu-

tilised by the underground reutilisation plants at Hattorf, Unterbreizbach, Wintershall

and Bernburg cover approx. 10% of the required stowage material. The remainder is cov-

ered using residues from potash and salt operations. By means of special techniques

and using the physical properties of the waste, a supporting effect is achieved that en-

sures the stability of the caverns over an extremely long period of time, i. e. thousands of

years. Inorganic toxic waste must satisfy the same conditions as in the case of disposal in

an underground disposal site. Suitable for underground reutilisation are ashes left over

from the combustion of sludge, fi lter dusts from the fl ue gas cleaning of domestic and

special waste incinerators, contaminated soil, construction waste and residue from the

evaporation of stockpile waste water.

Since June 2005, residential waste (e. g. domestic waste, bulky waste or industrial waste)

may no longer be stored untreated above ground, but is supplied to waste incinerators

for thermal reutilisation. This led to the full utilisation of the existing waste incinerators

and fi nally to an expansion of the capacities. We anticipate a signifi cant increase in vol-

ume of fl ue gas cleaning residues resulting from this combustion process until 2010 and

in which, as the market leader in the underground disposal of fl ue gas cleaning residues,

we will participate to an increasing extent. All plants for underground waste reutilisation

are currently operating at high capacity. In order to be able to cope with the expected

additional quantities and maintain our market position in Germany, we have since 2005

been investing in increased capacity at several reutilisation sites.



Secure, long-term storage of Big Bags

28

Development of the chloride value at GerstungenDaily Chlorid content at the Gerstungen level in mg/l

10,000

15,000

20,000

25,000

30,000

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 20060

5,0002,500

Start of the salt burdencontrol and recovery ofthe biological system in the Weser and Werrarivers



Tailings pile at the Neuhof-Ellers plant

Position: Disposal of saline rainwater from the Neuhof tailings pile

With the planning of the water pipeline from Neuhof to the Hattorf site of the Werra

plant in 2006, we initiated a disposal and reutilisation project that has in part aroused

much controversy among our stakeholders.

The crude salt extracted has a content of 13 to 27% of potassium chloride and 11 to 27%

of magnesium sulphate, and only these minerals can be used economically. The back-

ground: the sodium chloride residues that inevitably result from the crude salt process-

ing are piled up at the sites of the Potash and Magnesium Products business segment.

At the Neuhof-Ellers site, the saline waste water resulting from natural precipitation has

been pumped almost completely into porous, absorbent layers, the so-called platy dolo-

mite, at a depth of 400 to 500 metres. Only small quantities are fed into the Fliede, a

tributary of the Fulda river. The capacity of the platy dolomite is, however, limited and

only available for a few more years.

The proof of a long-term, sustainable disposal of saline rainwater is provided by a condi-

tion from the approval of the tailings operations. We are therefore plannig to construct a

63-kilometre pipeline to the Hattorf site near Philippstal in order to sustainably dispose

of the pile waste water – at present 500,000 to 700,000 cubic metres per annum. There

we want to use the pile waste water in the above-ground production of the Hattorf site

and will thus be able to reduce the amount of river water we draw from the Werra by

230,000 cubic metres per annum.

We carefully considered all conceivable alternatives to the construction of a saline water

pipeline: from the removal of the pile via the evaporation of the saline water to the fl ood-

ing of the mine workings, the covering of the pile or through discharge into the Main river.

What all these variants have in common is that they do no constitute a long-term solution,

have a disproportionate impact on the environment or conceal massive safety risks for the

mining region. The meticulous checking of alternatives – by our own experts and external

assessors – must have been completed prior to commissioning of the waste management

concept. Apart from the impairment of nutrients, the oxygen balance and the structure of

the river, the chloride content of the Werra river is an important criterion.

29

Ecol

ogy

The introduction of environmentally friendly processing technologies (see “ESTA® proc-

ess” on page 25) already made it possible to signifi cantly lower the salt content of the

Werra river in the 1990’s. While prior to the political changes of 1989/1990, up to 40,000

milligrams of chloride per litre of water were being measured at the Werra water gauge

at Gerstungen, we have succeeded since 2000 in complying with the limit value of 2,500

milligrams of chloride per litre of water. We have been steering the discharge of saline

waters into the Werra river by means of a sophisticated computer system since 2000.

It ensures the strict consideration of river conditions and the critical values applicable

during the discharge process. If, during low-water periods, the salt content of the Werra

has already reached the critical value as a result of diffuse inputs and other pre-existing

levels of water pollution, we do not discharge any saline water. Thanks to the evenly

dosed discharge, fl uctuations in the chloride content can be avoided as well as resulting

disruptions in the ecological balance. This has produced a revival of fl ora and fauna.

We have informed the neighbouring local authorities comprehensively and at an early

stage about the factual arguments and our own position. The impact on the country-

side will be minimised by the laying of the saline water pipeline, to the greatest extent

possible, parallel to the existing long-distance natural gas pipelines. We shall also take

fi nancial precaution to furthermore ensure that in the future too, the operation of the

pipelines, including any repair and replacement work, can be fi nanced without the use

of public resources.

Expansion of the Sigmundshall tailings pile

Residues from production are also piled at the Sigmundshall site in Wunstorf-Bokeloh.

Last year, the State Authority for Mining, Energy and Geology (LBEG) in Lower Saxony

approved the application of the potash plant for the early commencement of the expan-

sion of the tailings pile, so that in spring 2007, we can prepare the necessary earthworks

for the expansion area. This ensures that it will be possible to begin the gravelling of this

partial area on deadline this summer. For the employees of the Sigmundshall potash

plant the approval brings the certainty that there are, in principle, no grounds for de-

laying the expansion of the tailings pile and that the plant, which employs around 750

people, has prospects extending beyond 2007.

Granulation of an animal hygiene product

An example of the successful reuse of a site, in which we have harmonised economic,

ecological and social aspects, is the manufacture of the animal hygiene product Catsan®

in the granulation and drying facilities of the former Salzdetfurth potash plant. Since the

end of potash production in 1992, the plant has profi ted from its long years of relations

with customers and suppliers: a manufacturer of cat litter, who used to obtain a raw ma-

terial from Salzdetfurth, decided to transfer his production to Salzdetfurth after it was




The Werra river at Heringen

30

not possible to expand production capacity at his old location. The new location had not

only the appropriate presses, mills and granulation equipment, but also the appropriate

processing know-how. Since 1995, the company producing the necessary raw materials is

also present at the site, so that costly deliveries of raw materials are no longer required.

Merkers Adventure Mine

A further example is the former potash mine, Merkers Adventure Mine, which opened its

doors in 1991 and was able to welcome its millionth visitor in 2006. As well as obtain-

ing an insight into a modern mining company, it is also possible to gain much valuable

information about the history, development and tradition of potash mining. In addition,

concerts are held several times a year in a hall that was formerly a large bunker. Further

information can be found on www.erlebnisbergwerk.de.

Last year, the Merkers Adventure Mine was included in the European Route of Industrial Heritage (ERIH). ERIH has the goal of making European industrial her-itage something that can be experienced and of also developing selected sites of particular industrial importance within the framework of tourism concepts. Moreover, the crystal grotto has received an award as a national geotope. The Akademie der Geowissenschaften zu Hannover e.V. considered the way in which the forces of the earth formed salt crystals of a unique size worldwide to be par-ticularly fascinating.

Recultivation and surface protection that is safe in the long term

At K+S, the Inactive Sites unit looks after former potash and rock salt mines that have

been closed. In 1997, on the basis of an inventory of all closed-down sites, we set up a

programme intended to last many years in order to process the contaminated sites in

a structured way. The costs of the programme amount to approximately € 100 million.

The area looked after comprises 29 former sites in Lower Saxony and one each in North

Rhine-Westphalia and Baden-Wuerttemberg. At each site, a careful examination is made

of whether the available facilities can be used again, and in what way. If no reasonable

use of a mine can be made, the shafts are fi lled with hard rock material and the caverns

with steeply-inclined beds are fl ooded. The mines are said to be secured. The surface

areas are carefully examined and any pre-existing environmental contamination is

cleaned up. At present, seven sites in Lower Saxony are in the process of being secured,

and at fi fteen sites, the process has already been completed. Safeguarding works with

a high priority will be completed in 2008.



31

Ecol

ogy

Landscaping of tailings through construction material recycling

At the location of the former potash plant Friedrichshall in Sehnde, we are operating a

plant for the recycling of construction materials. We want, by means of this activity, to

cover the tailings with soil and construction rubbel. K+S has decided on this inactive loca-

tion since it is located in a densely populated urban area, which offers great potential in

terms of quantities of soil and construction materials. In addition, there are very good,

direct connections to waterways, railways and the road network. Moreover, at the foot of

the tailing, there is suffi cient space for the necessary technical infrastructure.

A very wide range of different types of soil (stones, sand, gravel etc.) and construction

rubbel will be used to cover the tailings. After they have been covered completely, pre-

cipitation water will no longer be able to reach the residues tailings and the emergence

of saline tailings waters can thus be prevented. The covering of the tailings, depending

on the available quantities of covering materials, will be completed in 15 to 25 years.

The recultivation of the tailings serves not only to protect the environment and generate

profi ts, but enjoys a high level of acceptance among the population. The covered tailings

fi t into the local recreational concept of the surrounding towns and local authority dis-

tricts. In 2005, at the suggestion of the town of Sehnde, we organised a mountain festi-

val together with local representatives. The good response of the event has led to its now

being held every two years and forming a fi xed feature of the regional cultural calendar.

The burning of fossil fuels increases the global accumulation of carbon dioxide in the

atmosphere and thus, the planet’s natural greenhouse effect. Emissions trading is one

of the options envisaged for reducing greenhouse gases by the 1997 Kyoto Protocol. The

European system for trading in emissions certifi cates entered into force on 1 January

2005. This system bindingly imposes a European-wide maximum level of carbon dioxide

emissions for all participating facilities. Companies that emit more CO2 than they have

been allocated can choose whether to invest in projects to reduce emissions or to buy

certifi cates on the market from other operators who have achieved major reductions.

At K+S a total of 16 plants participate in emissions trading. Emission rights for these

plants were requested and granted. We have lodged an appeal with the German Emis-

sion Allowance Trading Authority (Deutsche Emissionshandelsstelle DEHSt) against two

thirds of the CO2 allocation decisions from the fi rst trading period and against the as-

sessment of fees, which we consider disproportionate. In our opinion, the direct drying

facilities should not be included in emissions trading. In addition, the climate protection

measures that we introduced in the 1990’s have not received suffi cient recognition. This

procedure is still pending.


Emissions trading

Emissions trading

Tailings pile recultivation at Friedrichshall

32

On 28 February 2007, we submitted the emission reports of our participating power sta-

tions and drying facilities to the relevant authorities for a second time. Unfortunate-

ly, Germany has no longer taken into consideration the energy effi ciency of individual

plants during the granting of emission rights for the second trading period from 2008

to 2012. Instead, the plants are being assigned a “fl at-rate” percentage reduction obli-

gation. This particularly affects energy-effi cient plants, like our power stations, which

already have an effi ciency level of over 90%, thanks to our modern cogeneration plants.

Here, reduction requirements of up to 15% will be made for exemplary plants, which in

individual cases can only be complied with through cuts in production or the purchase

of emission rights. We had anticipated the granting of emission rights on the benchmark

principle (taking into account the energy effi ciency of a plant), since this would have cor-

responded much better to the original intention of emissions trading than the fl at-rate

approach selected.

Moreover, related bureaucracy is far greater in Germany in comparison to other EU

member states. We are seeking the introduction of a minimum threshold of 25,000

tonnes of CO2. For plants that emit less CO

2 per year, the documentation duties should

be tangibly reduced.

In future, we will also pursue our voluntary self-commitment to climate protection and

through increases in effi ciency, for example the installation of further gas turbines or the

replacement of older steam turbines, will continue to reduce our CO2 emissions.

Residues resulting from the processing of potash crude salt, saline waste water (see

Waste Water page 28) as well as peat extraction are the main factors affecting biodiver-

sity.

In Germany the extraction of peat is only permitted in moorland areas which were al-

ready under cultivation. When extracting peat for COMPO’s potting soil production, the

soil together with the vegetation is removed temporarily after the dewatering and stored

in order to preserve the vegetation potential. After the peat has been extracted, the indi-

vidual moorland is renaturated by replacing and moistening the soil previously removed.

As a result, the fl ora and fauna typical of undisturbed moorland soon fl ourishes again.

In particular, the reappearance of rare species of animals and plants not found anymore

in these areas before peat was extracted can be observed. The renaturation measures

comply with the EU Conservation of Wild Birds Directive and the Fauna/Flora/Habitat

Directive. The restored moorland areas also form part of the European “Natura 2000”

system of protected habitats.




33

Ecol

ogy


In 2006, the Akademie der Geowissenschaften zu Hannover e. V. declared the Huvenhoopsmoor to be a national geotope. The moor is the extraction area of the COMPO subsidiary Torf- und Humuswerk Gnarrenburg. In the opinion of the jurors, this moor is one of the few high moorland areas in the North German lowlands that retain their original vegetation and include two high moor-land lakes.

Product Stewardship

COMPO and fertiva participate in the Product Stewardship Programme operated by the

European Fertilizer Manufacturers Association (EFMA). Under this programme, European

fertilizers manufacturers have committed themselves to manufacture, pack, store, trans-

port and utilise their products and raw materials in a responsible and safe manner. The

basis of this is a comprehensive control system, with which the fertilizer producers can

check their performance and detect weak spots. Further information on Product Stew-

ardship can be found at www.efma.org.

Our potash fertilizers are natural products which pose no danger to the environment

provided that they are applied correctly; most of them have been approved for ecological

farming under EU law. The unprofessional application of fertilizers, especially nitrogen

and phosphate fertilizers, can lead to a spread of nutrients to non-agricultural eco-sys-

tems, thus raising the nitrate content of drinking water or result in an overfertilization

(eutrophication) of waters. For this reason, critical values and special requirements on

the application of nitrogen fertilizers in water protection areas have been introduced.

These dangers can be reduced to a minimum by targeted and needs-based application in

line with the fertilizer ordinance.

Measured and controlled use of de-icing salts

The use of de-icing salts by winter road clearance services has proved successful going

back many decades. Measured and used in a controlled manner, de-icing salt for winter

road clearance services are environmentally friendly and indispensable products for en-

suring road safety on motorways, roads and footpaths. It has been proven in a number of

studies that there is neither an economic nor an ecological alternative to de-icing salt for

ensuring safety on roads and motorways. On the basis of its results, the Eco-Institute in

Freiburg recommends, among other things, the use of the now widespread economical

pre-wetted salt technology. This technology makes it possible to reduce the quantity of

de-icing salt spread, while at the same time achieving an improved de-icing effect and

thus greater safety on our streets.



Production of the COMPO fertilizer Basacote®

34

Proper and environmentally friendly processing of packaging

Because the great majority of the products of the Potash and Magnesium Products and

fertiva business segments is sold in bulk or loose, customers are not faced with transport

and sales packaging. By contrast, most of the COMPO products are sold prepacked. Part

of esco’s products are also supplied in various types of packaging. Thanks to the coopera-

tion with the “Duales System Deutschland” and other processing facilities in Germany

and abroad, a proper and environmentally friendly processing of used packaging is guar-

anteed.

Environmental protection measures in 2006

In 2006, capital expenditure on environmental protection amounted to € 11.4 million. A

focal point of our environmental protection is the consistent lowering of the dust emis-

sions resulting from our activities and achieving an increased feeding back of dust to the

production process. This results in a reduction in specifi c material usage, which we con-

sider to be one of the cornerstones of sustainable production. In 2006, we substantially

reduced dust pollution through the use of a new type of fi lter material, for example, at

the Salzdetfurth site. However, in comparison to last year less capital expenditure in air

pollution control was necessary.

Our comprehensive groundwater protection programme was already completed in 2004

with the exception of some residual work, leading to a reduction in capital expenditure

in this area.

Capital expenditure on waste management (Business segment Waste Management and

Recycling) increased last year because of the installation of a thermal emissions treat-

ment for our REKAL facility.

In conjunction with the dismantling of old sites, we regularly carry out renaturisation

measures, that is, we restore commercially used areas to their original state. The clearly

higher capital expenditure on nature conservation is mostly due to the expansion of the

Zielitz tailings pile.

For 2007, we have planned capital expenditure for environmental protection in the scope

of approx. € 11 million.

Capital expenditure on environmental protection


Capital expenditure on environmental protection

Operating expenses for environmental protectionin € million

2006 2005

Total 90.8 90.0

Water protection 60.1 56.8

Air pollution control 19.8 21.5

Waste management 4.1 3.8

Nature conservation 2.8 4.3

Others 4.0 3.6

Capital expenditure on environmental protectionin € million

2006 2005

Total 11.4 10.0

Water protection 1.9 2.3

Air pollution control 2.1 3.0

Waste management 4.7 3.6

Nature conservation 2.7 1.1

35

Ecol

ogy

Materials consumption

In 2006, a total of 47.7 million tonnes of raw materials, 81,700 tonnes of auxiliary ma-

terials and 19,200 tonnes of factory supplies were employed at our sites. Of the raw

materials employed, 46.0 million tonnes applied to crude salts and 1.2 million tonnes

to organic raw materials such as peat, soil and composts as well as mineral fertilizers

employed and trace nutrients.

Auxiliary materials include process chemicals and conditioning materials (anti-dusting

and anti-caking additives). Factory supplies are those required to operate production fa-

cilities. They consist above all of grease, oil and fuel. In 2006, a total of 974 tonnes of oil,

70 tonnes of grease and 16 million litres of diesel fuel were used.

Recycled materials

At our Sigmundshall site, we have been producing the smelting salt Montanal, a spe-

ciality product required in large quantities by the secondary aluminium industry for its

production, for more than 30 years. In addition, in 1995, a REKAL facility was additionally

brought into operation, which recycles and reutilises up to 100% of the salt slag resulting

from the aluminium smelting process. In 2006, aluminium granulate was obtained in

the recycling process, which is sold to the metallurgical industry, as well as the fertilizers

potassium chloride and ammonium sulphate. A gas mix generated during the recycling

process is used at the Sigmundshall site instead of natural gas. The resultant residue –

mainly sodium chloride and aluminium oxide – is used to cover the tailings pile resulting

in 80% less pile waste water in the covered area. In effect, we have achieved a closed raw

materials circuit. The long lasting experience with recultivation of tailings – especially of

the university Kassel – played an important part in this.

Composted green waste is also used as an input material in production processes. For

example, in the framework of potting soil production at COMPO, approx. 63,000 tonnes

of compost are used.

Energy consumption

In 2006, total energy consumption amounted to 6,631 GWh. The specifi c energy

consumption per tonne of manufactured product was 382 kWh/tonne of product.

6,281 GWh applied to natural gas, 21 GWh to heating oil and 329 GWh to outside

electricity. Compared with 2005, when energy consumption was total 6,593 GWh or

385 kWh/tonne of product, this was an increase in absolute terms, but a slight volume-

specifi c decrease. 191 GWh of electricity were fed into the public network.


Figures and notes

Figures and notes

Tailings pile slope at the Sigmundshall potash plant after recultivation

Specific energy consumption(in kWh/t of product)

2002

2003

2004

2005

2006

382

473 464

405 385

600

500

300

100

400

200

36

Specific sulphur dioxide emissions(in g/t of product)

2

8

32 2

10

8

6

4

2

2002

2003

2004

2005

2006

Emissions

CO2 emissions in 2006 amounted to 1.27 million tonnes. The carbon dioxide emissions

per tonne of manufactured product were 73 kWh/tonne of product. Compared with the

previous year, at 1.26 million tonnes or 73 kg/tonne of product, there was only an in-

crease in absolute terms, due to higher production. NOx and SO

2 emissions amounted to

1,694 tonnes (NO2) und 39 tonnes (SO

2). Emissions per tonne of manufactured product

were 98 g/tonne and 2 g/tonne. Compared with the previous year with 1,578 tonnes and

39 tonnes, there was an increase in the case of NOx, while a constant level could be ob-

served in the case of SO2. In terms of volume specifi city, there was only in the fi rst case of

NOx an increase compared with the previous year (92 g/tonne), while the SO

2 emissions

remained unchanged in terms of volume specifi city.

In previous years, we have already established a series of measures to reduce emissions

and we will take every opportunity to further reduce CO2 emissions. Due to the persist-

ent high demand for products from the Potash and Magnesium and Salt business seg-

ments, we expect a very high utilisation of our plants in the coming years too and, as a

result of this, CO2 emissions comparable with those for 2006.

Water consumption reduced to the minimum

Thanks to numerous process optimisation measures, water consumption has been re-

duced in the past. Particularly through the introduction of electrostatic separation (ESTA)

in crude salt processing, a decisive breakthrough in considerably reducing water con-

sumption was already achieved years ago. Total water consumption was 106.7 million

m3 in 2006, as against 105.8 million m3 in 2005. The increase in water consumption can

be ascribed to increased output. By contrast, specifi c water consumption could be re-

duced from 6.2 m3/tonne to 6.1 m3/tonne. In the meantime, a level has been reached

that comes very close to the process-related minimum of water consumption. A further

tangible reduction of water consumption is no longer possible with current production

technology.

Recycling of waste

Apart from production residue, our sites are generating waste that is subject to the

German Act for Promoting Closed Substance Cycle Waste Management and Ensuring

Environmentally Compatible Waste Disposal (Kreislaufwirtschafts- und Abfallgesetz).

Most of this waste is packaging material, scrap metal, used oil and grease, solvents

and construction waste. A total of 37,300 tonnes of waste was generated in 2006,

which corresponds to 2.1 kg of specifi c waste per tonne of product. Of this amount,

35,400 tonnes were recycled, with construction waste almost completely recycled.

1,900 tonnes of waste was disposed of.


Figures and notes

Specific quantities of waste(in kg/t of product)

reutilised waste, excluding construction waste

2.0

1.5

1.0

0.5

2.5

4.0

3.5

3.0

waste disposed of, excluding construction waste

construction waste

2002

2003

2004

2005

2006

Specific carbon dioxide emissions(in kg/t of product)

2002

2003

2004

2005

2006

73

91 89

7773

100

80

60

40

20

37

Ecol

ogy

Discharge and injectionof saline waste water

(in m3/t of product)

0.6

0.4

0.2

0.8

saline waste water discharge

saline waste water injection

2002

2003

2004

2005

2006

Waste water

The quantity of saline waste water largely depends on the individual production process

and thus on the respective crude salt. In 2006, the quantity of saline waste water to-

talled 14.5 million m3 or 0.9 m3/tonne of product. Of this, 6.7 million m3 or 0.4 m3/tonne

of product were discharged and 7.8 million m3 or 0.5 m3/tonne of product injected. Com-

pared with the previous year, when 6.8 million m3 or 0.4 m3/tonne were discharged and

8.0 million m3 or 0.5 m3/tonne injected, the quantity of waste water could be reduced

both in absolute and specifi c terms.

Within our R&D activities we are working on additional measures to improve exploita-

tion, which should contribute to the further reduction of waste water.

In the potash industry, river water is almost exclusively used for cooling purposes. It is

not chemically treated, but merely heated, after which it is channelled back to the sur-

face water. If there is a surplus of rinse water, sewage and cleansing water that cannot be

reutilised, it is discharged to surface waters in accordance with water law permits.

The amount of rain water and sanitary waste water is of secondary importance com-

pared to the total quantity and is not causally related to the company’s production proc-

esses.

The environmental balance sheet can be found in the tabular appendix on page 78.


Figures and notes

38

Teamwork


ment constitute a challenge for any personnel policy. Increasingly, the requirements of

the future world of work in Germany have to be met by fewer and, at the same time,

older employees. In order to remain innovative and competitive in the future, we have

paved the way for successful further development with the individual components of

our future-oriented personnel management policies.

Need-based vocational training and active promotion of new talents are important in-

vestments in our future. Through further training and the gaining of qualifi cations, our

employees are continually preparing themselves for the future requirements of profes-

sional life. In future too, we mainly want to fi ll management positions from our own

ranks.

To secure jobs over the long term – especially in Germany – we make our working hours

as fl exible as possible to meet the requirements of production and workfl ows. We are de-

veloping performance-related remuneration components in order to involve our employ-

ees commensurately in the commercial success of the K+S Group and to reward them

for their personal performance. However, this also contributes to the reduction of risk in

the event of temporary declines in earnings, as personnel expenditure is to some extent

automatically adjusting to the results of the company.

We cannot make up for the gradual reduction in statutory old-age pension provision.

Nonetheless, we support our employees actively in securing their standard of living

in old age by offering various possibilities for individual provision under our company

pension scheme.

What demographic change means for us is fostering new talents, but also making eve-

ry effort to keep our employees fi t. The promotion of health within our company has

therefore become an integral part of our corporate culture. With an effective and tailored

promotion of the company health scheme, we can contribute to keeping our personnel

effective and motivated, especially in the light of the increased requirements in the com-

panies and longer working life.

Increase in number of employees

As of 31 December 2006, a total of 11,873 people were employed by the K+S Group, of

which 771 employees came from the salt producer SPL acquired mid-year. Compared

with the previous year (11,012 employees), the number has thus risen by 7.8%. The turn-

over rate, which documents the ratio of voluntary departures of employees to the aver-

age staff level, remains as in recent years at 3%. This illustrates the high loyalty felt by

employees towards the company. At 1.9%, the overtime rate in 2006 was slightly higher

than in the previous year.





39

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The number of employees is determined on the basis of FTE (Full Time Equivalents),

which means that part-time positions were weighted corresponding to their share in

working hours.

Employees by business segment 2006 2005

Potash and Magnesium Products 7,550 7,490

COMPO 1,260 1,292

fertiva 61 58

Salt 2,194 1,385

Waste Management and Recycling 34 33

Services and Trading 407 393

Other segments 367 361

Total 11,873 11,012

The ratio of female employees in the K+S Group is 10.5%. The reason for this relatively

small proportion is the high number of industrial positions in the mines and factories

of the Potash and Magnesium Products and Salt business segments, which, by law, are

largely reserved for male employees. At locations with a greater number of commercial

positions, the ratio of female employees is correspondingly higher. For instance, at the

headquarters of K+S Aktiengesellschaft in Kassel 38% of the staff are women and they

account for 50% at fertiva in Mannheim.

The proportion of severely handicapped members of staff in 2006 was 5%. In close

cooperation with the relevant authorities and our representatives for severely handi-

capped persons we have created workplaces adapted to handicapped persons, thus fur-

ther fostering the integration of these employees.

An average length of service of 18.4 years attests to the high degree of loyalty that

employees feel towards the company. The average age of K+S employees is 42 years.

About 84% of our employees are based in Germany. This is primarily due to the geo-

graphical location of our crude salt deposits in the Potash and Magnesium Products and

Salt business segments. 9% of our employees are based in other European countries.

Through the acquisition of the Chilean salt producer SPL, the percentage of employees

overseas has risen to 7%.



up to 20 years 5.5

Age structure(in %)

21 to 30 years 13.9

31 to 40 years 20.5

41 to 50 years 33.6

51 to 60 years 23.9

over 60 years 2.6

Trainees 5.2

Personnel structure*(in %)

Employees (salaried) 31.6

Industrial employees (waged) 55.1

Non-pay-scale 8.2

*in relation to the German locations

40

Personnel expenses have fallen

Personnel expenses, at approx. € 663.5 million, are the largest set of costs in the K+S

Group and have fallen by € 7.6 million or 1.1% compared with the previous year. The

inclusion of SPL has led to an increase in personnel expenses of € 8.8 million. However,

due to lower allocations to the provisions for partial retirement, there has been a

decrease in personnel expenses overall.

During the year under review, we paid a total of € 522.2 million in wages and salaries

(+0.6%) and € 134.8 million in social security contributions (-2.3%). Expenses relating

to company pensions and support fell by 55.8% to € 6.2 million this year. The lower costs

for company pensions are due to the fact that in 2005 we made a non-recurrent addi-

tional contribution to the BASF pension fund. During the year under review, personnel

expenses per employee amounted to € 56,377 (previous year: € 60,915) and thus fell

by 7.5%.

Flexible working hours models

Our fl exible working hours models are oriented towards the requirements of the produc-

tion fl ows. The production locations work in one-, two- or three-shift operation as well as

in fully continuous shift systems (three shifts per day; seven days a week). In order to be

able to react fl exibly to seasonal peak demand for instance in the de-icing salt business,

agreements regarding working hours have proved worthwhile whereby in the Salt busi-

ness segment employees can earn working time credits in the months with higher pro-

duction, which they can spend in the spring and summer. In 2005, COMPO too launched

an annual working hours account for all operating areas in Germany that are affected by

seasonality of business.

In Germany, longer working hours are increasingly gaining acceptance, especially if they

are related to greater job safety and reasonable participation in fi nancial success. In the

K+S Group, 86% of employees meanwhile work 40 hours a week again. At COMPO, for ex-

ample, we have achieved the fi rst increases in effi ciency in the production areas through

the return to the 40-hour week. In the commercial areas, the working hours gained have

been used to optimise workfl ows and processes.

The fl exible working hours models, especially the working time honour system, also

make it possible for our employees to better combine their work and family lives. Our ex-

perience has thus been positive with the working time honour system at the headquar-

ters of the K+S Aktiengesellschaft and at data process in Kassel, at fertiva in Mannheim,

at the esco headquarters in Hanover and at the K+S Research Institute in Heringen. This

working hours model offers the greatest possible degree of fl exibility in consultation

between employees and superiors, promotes cooperation built on trust and boosts the

self-responsibility of employees.

Employees by country 2006 2005

Belgium 68 76

Brazil 66 53

Chile 602 20

Germany* 9,991 9,880

France 620 639

Greece 33 31

Italy 70 65

Mexico 15 11

The Netherlands 74 72

Austria 16 16

Portugal 50 55

Switzerland 15 15

Spain 78 73

USA 76 7

Gesamt 11,873 11,012

* inactive work contracts, Expatriats and

persons marginally employed are not

included

Salt production at Bernburg



41

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In addition to this, there are various part-time models, ranging from classic part-time

working through job sharing to partial retirement. We want to make it easier to plan

child-raising leave and promote the reintegration of employees following parenting ab-

sences. On the basis of an appropriate workplace agreement, we have expanded the ad-

vice and information available at the Kassel site and offered additional release periods

for cases when employees have to provide urgently needed care. A corresponding set of

rules has now also been agreed for the K+S Research Institute.

For the fi rst time last year, we implemented care facilities for the children of our employ-

ees at the Kassel location during the summer holidays. Owing to the great demand, we

will also be offering these care facilities in 2007.

Particpation in the company’s success

We want our employees to think and act in company terms. We can best achieve this by

involving them in important decisions early on and allowing them to share materially

in the success of the company. Our remuneration system in Germany therefore consists

of three components: pay-scale wages or fi xed salary, profi t participation in the form of

variable remuneration and stock ownership through employee shares. By thus having

our employees participate in the success of the company, we build up their loyalty to our

company and strengthen their interest in our commercial success, in a good share price

performance and the highest possible dividend.

Our variable remuneration system also contributes to the reduction of risk in the event

of temporary declines in earnings, as personnel expenditure is to some extent automati-

cally adjusting to the results of the company. We regard the fl exibility of personnel costs

that we have thus gained as indispensable, since we are interested both in economic ef-

fi ciency and the sociopolitical responsibilities arising from the jobs we provide.

For those employees to whom the potash and rock salt collective wage agreement ap-

plies, the profi t-related annual bonus amounts to between 75% and 150% of the monthly

remuneration set forth in the wage agreement. Trainees receive 80% of this. The employ-

ees of esco received a bonus of 150% for the year 2006. The employees of K+S Aktienges-

ellschaft and the Potash and Magnesium Products business segment receive a bonus of

over 150% in the event of corresponding commercial success; it can reach a maximum of

215%. For 2006, we have made an annual payment of 215% of the monthly remunera-

tion for the employees of K+S Aktiengesellschaft and of 201.4% for those working at K+S

KALI GmbH.



42

Those employees of COMPO paid in accordance with the chemicals pay scale at the Mün-

ster and at the Uchte location receive a profi t-related annual bonus amounting to 80%

to 150% of the monthly remuneration. For 2006, we have made an annual payment of

115% of the monthly remuneration. fertiva has agreed with its pay-scale employees, who

are also paid in accordance with the chemicals pay-scale, that as of 2006 the annual pay-

ment will be replaced by a variable remuneration component. This variable share is 70%

dependent on the success of the company (2006: 200% of the monthly remuneration)

and 30% on the assessment of their personal performance. The variable part makes up

10% of the annual salary, when the whole is viewed as 100%.

Employees who are not covered by collective wage agreements (no-pay-scale) are gener-

ally paid according to remuneration models that reward both the success of the compa-

ny and personal performance in relation to agreed benchmarks. In an annual interview

with their superiors, employees discuss the prospects of their vocational advancement

and promotion as well as the objectives and work results that have been achieved, and

objectives for the following year are agreed. In 2005, we reorganised the remuneration

systems for no-pay-scale employees to harmonise the various personnel-policy instru-

ments within the K+S Group. The new remuneration system, which offers more variabil-

ity and transparency, was implemented with effect from 1 January 2006.

Increasing demand for employee shares

As in previous years, in 2006 we have also offered employee shares on preferential terms

to the employees of the participating German group companies. In the past, the benefi t

for the employees made up approx. 10% of an employee’s basic monthly salary. Given

the economic situation, the benefi t to the employees in 2006 was increased exception-

ally to 15%. 65% of all employees have taken up the offer. In 2006, K+S issued 119,543

shares involving a total benefi t of € 3.4 million (including the employer’s share of the

social security contributions). In 2007 too, we will again offer employees shares at an

attractive price. Particularly for tax law and stock corporation law reasons, we do not

offer employee shares to our foreign employees. We are currently checking whether a

participation of these employees is possible or meaningful.

For K+S, vocational training is an important investment in the future – not only in the

light of demographic change. We are aware of our social responsibilities as an employer

in regions that in part suffer from structural weakness and are committed to Germany

as a location, whose future as a competitive industrial base depends above all on new

generations of well-trained specialists. Especially against the background of the grow-

ing international orientation of the company and the increasing complex tasks it faces,

the demands on K+S employees are constantly increasing. Already during training, K+S

teaches a wide range of different competencies so that future generations of employees

can start their career and take on responsibility directly after their training.


Doubly qualifi ed through training and study



Master display at the Zielitz site

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Against this background, in-house training combined with a state-approved course of

study at a vocational or an administrative and economic academy (BA/VWA) has dem-

onstrated its value. The advantages of such dual qualifi cation – for which K+S covers

the college fees – rest in the close combination of theory and practice as a result of the

constant rotation between academy and training workplace as well as in the shorter

orientation periods upon the successful completion of training. What is learned during

studies can be applied directly within the company and trainees can solve operational

issues using the latest scientifi c fi ndings.

K+S started a training initiative last year. In addition to the 145 new positions agreed

through collective bargaining, a further 27 young people have been given a training posi-

tion. K+S has thus attained a training ratio (in relation to its German locations) of 6.2% at

the end of the year. Altogether, 620 young people are preparing to start their careers at

17 locations in 21 types of job requiring training. Since summer 2006, the esco locations

of Hanover and Borth as well as the COMPO peat and humus plant Uchte have also been

offering training places.

In the commercial, chemical and IT occupations, the number of female and male trainees

is balanced. On account of mining operations, the ratio of male trainees in the industrial-

technical professions is naturally higher. After their fi nal examination, the trainees stand

a very good chance of obtaining a permanent position in the K+S Group if they have

performed well. In the past few years, we have consistently taken on 85% of its trainees;

in 2006, that number even rose to more than 90%. In total, we have invested € 11 million

in training in 2006.

Practical advancement for next generation employees

K+S offers various ways of entering the company for dedicated and fl exible job entrants.

University graduates – especially in mechanical engineering, electrical engineering, en-

ergy and power station technology, mining, chemistry, process technology and business

management – commence employment with us directly. By working several business

and functional units as well as at various sites, the young graduates can already put their

theory into practice at an early stage, and get to know the many facets of the K+S Group

at the same time. In order to recruit junior staff employees, the company is present

at company contact fairs held at selected universities several times a year. So that the

young academics can gain a realistic picture of the responsibilities they would have in

an internationally growing group, K+S employees also appear at the university fairs,

who themselves entered the company as graduates and have successfully taken the fi rst

steps in their career. Each year, some 300 interested young people take advantage of the

possibility of getting to know our company via practical training or in connection the

preparation of a diploma thesis.



Practical advancement for next generation employees

*Training ratio

5375.5 %*

5465.6 %*

5855.9 %*

5865.9 %*

6206.2 %*

600

400

200

Number of trainees (Germany)

2002

2003

2004

2005

2006

44

Last year we created a new training concept – the “Supply Chain” trainee program. The

strong internationalisation of our business processes is giving rise to new requirements,

which make systematic training in this area necessary. Junior staff employees are pre-

pared for planning and management tasks along the whole value-added chain. They are

provided with the necessary tools at training facilities abroad, together with intensive

language training, and during deployment at the production sites.

The promotion of future generations also means for us providing further training for

employees from the technical, mining and production areas. From these ranks, we regu-

larly recruit employees with the aim of providing them with training as a technician or

more advanced qualifi cation bringing with it the prospect of a management career. Our

partner is the Fachschule für Wirtschaft und Technik (FWT) in Clausthal-Zellerfeld with

whose faculties we cooperate closely and thus guarantee high-quality training.

With this systematic promotion, we are preparing for the inevitable loss of specialist and

managerial staff in the coming years through retirement. In addition to good specialist

knowledge and skills, we assume wide-reaching experience in different areas and a high

level of social skills. Managerial positions in the K+S Group are mainly fi lled by employees

from our own ranks. To this end, the personnel committees meet at regular intervals.

Their task is to ensure group-wide succession planning in Germany and abroad across

all business segments and initiate the personnel development measures necessary to

achieve this.

Further training for employment abroad

Further training is a key building block of both corporate and individual success. The

knowledge and skills of our employees are regularly adapted by means of targeted fur-

ther training measures in order to meet the future requirements of professional life. For

us, successful personnel development means recognising these requirements at an early

stage and organising the necessary further education in such a way as to actively see

through the growth of the K+S Group and the associated change process.

Increasing internationalisation thus entails a greater need for language and inter-

cultural skills and the targeted preparation of our employees sent to work abroad. Family

members are also involved in the intercultural training, which covers the culture, value

systems and special features of each country.



K+S provides information at Göttingen University job fair

Languages 165

Participants in furthereducation measures

Key qualificationsfor apprentices 331

Management skills 86

Specialist skills 1.480

Others (methodological expertise, QM) 568

Employee leadership 636

IT qualifications 496

45

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In the annual or employee interviews, employees and their superiors jointly determine

the specifi c training requirements. Apart from IT and language training, we also offer

occupation-specifi c training and training that is required by law. Employees receive

direct support for new and complex tasks by means of process-accompanying training

measures.

In 2006, 3,762 employees of the K+S Group completed measures leading to qualifi ca-

tions (previous year: 2,760 participants). The average number of training hours per year

and employee was thus 7.5 hours (non-pay-scale: 21 hours, pay-scale: 6 hours). The costs

for further training amounted to € 4.0 million (previous year: € 3.4 million). The decisive

factor in this increase is that more employees gained qualifi cations at the Fachschule für

Wirtschaft und Technik (FWT) in Clausthal-Zellerfeld.

At K+S, it is the goal of knowledge management to make all employees more aware of

company-specifi c important fi ndings and experience and to create the conditions for the

systematic recording, use and securing of existing know-how in the company.

In the continuous improvement process (CIP), we have selected a comprehensive me-

thodical approach in which, with the integration of the company’s suggestions system,

the quality of processes and products is continuously improved with the participation of

all employees.

In 2006, with 9,162 suggestions, the number of ideas submitted was slightly lower than

the high level of the previous year (-3%). In 2006, we integrated the Bernburg and Braun-

schweig-Lüneburg sites into the process; a total of 13 German sites have thus been in-

tegrated.

Employee involvement increased from 49% last year to 50% in 2006. We have thus

achieved the important goal of motivating at least half of our employees to submit sug-

gestions. With a ratio of 956 suggestions per 1,000 employees (previous year: 1,008), K+S

is above the average for companies in Germany. The economic effect generated in 2006

amounted to € 3.7 million (previous year: € 5.8 million).

We present attractive and smart suggestions for improvement to the whole Group in a

newsletter three times a year. We also see an approval of our approach in the opinion of

the Deutsche Institut für Betriebswirtschaft, which awarded K+S KALI GmbH third prize

for the best idea management at a medium-sized company.


Development ofsubmitted suggestions

2002

2003

2004

2005

2006

9,162

4,109

5,165

8,590

9,47810,000

8,000

6,000

4,000

2,000



Knowledge management on site

to 29 years 955.5

Number of participantsby age group

30–39 years 797.5

40–49 years 1,271.6

over 50 years 737.4

46

For us, co-determination means involving employees in important decisions in a timely

manner. Because we are convinced that informed employees are better motivated and

more ready to share the consequences of even diffi cult decisions and that they will

therefore be implemented more quickly and, above all, more effi ciently. Co-determina-

tion promotes and presents a challenge for the taking on of responsibility, and not only

in the short term, but also in the medium and long term. And fi nally we can better re-

solve confl icts. It is not for nothing that we have fewer strikes in Germany, and there is

greater social harmony in our country than in many others.

In the K+S Group in Germany, corporate co-determination is represented by 20 elected

works councils with a total of 170 members. In order to effectively and purpose-

fully represent the interests of the employees, a joint central works council for Kali

und Salz has been created instead of central works councils for the K+S Aktiengesell-

schaft, K+S KALI GmbH and esco – european salt company. In spring 2006, works coun-

cil elections took place at all German sites of the K+S Group. 8,086 employees partici-

pated in these elections; this corresponds to a turnout of 83%. The highest-level body for

worker representation is the Group works council. The „Kali und Salz“ and COMPO cen-

tral works councils as well as the works council of fertiva are represented in it. The work

of the Group and central works councils is supported by eight committees.

“In the K+S Group, cooperation with the works councils and the trade union IG Berg-bau Chemie Energie (IG BCE) goes without saying. Corporate co-determination means for me that the interests of the employees are taken into account to a reasonable extent when the company makes decisions. To ensure this from our side, in the past few years we have created effective works council structures. Simultaneously, we are also ready to take on responsibility for sustainable corporate success and su-stainably safe jobs. Since co-determination also means co-responsibility. K+S is living proof that social partnership and corporate success can go hand in hand.” Klaus Krüger, Chairman of the Group Works Council

Approximately 75% of our employees in Germany are unionised in trade unions. At out

locations outside Germany too, the workers’ representatives have consultation, informa-

tion and advisory rights in fi nancial and organisational matters as well as similar co-de-

termination rights in relation to social issues.

When it comes to participation in the formulation of EU-wide legislation and regulations

that affect the K+S Group’s business activities, cooperation with our tariff partners is

increasingly gaining in importance. The joint positions of the social partners are commu-

nicated to the EU Commission via the “Social Dialogue Mining” in which the members

of the European mining associations and the Employee Organisation of the European

mining are represented (see page 60).




Chairman of the Board Dr. Bethke (second from left) in discussion

with works council members

47

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Works council members in discussion at the group-wide works council conference

A fi xed event in the calendar is the annual conference of all works councils, at which the

Board of Executive Directors and the works councils discuss key issues in corporate devel-

opment and the focal points of work on the preceding and the coming year.

One of the main focuses in 2006 was the further optimisation of the company pension

provisions for its employees. A new collective bargaining agreement provides the previ-

ous employer’s contribution for capital formation to be paid into the personal pension

provision.

Since 2006, all employees also have access to the Internet through their personal PC

user rights. In cooperation with the IT committee of the central works council, we have

moreover established comprehensive rules covering the responsible use of the Internet

for work purposes. We have thus worked out the necessary basic parameters that will

enable our employees, including those without a PC workplace, to gain access to the K+S

intranet from home.

Many people in Germany are concerned about the intense public debate on the prob-

lems with fi nancing the statutory pension insurance fund. However, survey fi ndings

along with the previous participation rates in self-fi nanced pension schemes indicate a

still low level of awareness of the fact that additional safeguards are necessary in order

to guarantee a reasonable standard of living in old age.

In 2006, we started an information campaign at the esco site in Borth, during which we

presented not only our various offers regarding company pensions, but also the legal

and demographic facts. Around one third of the employees have taken up the offer of be-

ing provided with comprehensive information in small groups. The high level of interest

demonstrates that especially our younger employees are prepared to examine issue in

depth if the situation is presented in a practically relevant and comprehensible way. The

information campaign will be extended to cover further sites in 2007.

Together with our tariff partners, we have also provided a further incentive for additional

private pension provision. The new pay deal in the potash and rock salt collective bargain-

ing area includes an increase in the employer supplement to the previous capital-form-

ing payments, which will in future be transferred to the company’s pension scheme.

In 2006, we spent a total of € 3.4 million on company pension schemes for our employ-

ees. Each employee of participating Group companies receives an employer supplement

amounting to 13% of the sum that he converts from his remuneration subject to social

insurance contributions and pays into one of the paths leading to a company pension

offered by K+S.


Retirement plan information campaign



48

K+S VorsorgePlus

An important building block of the company pension scheme is the K+S VorsorgePlus e. V.

relief fund. Basic pension cover under K+S VorsorgePlus is intended for employees who

have no pension insurance under the Miners’ Social Insurance and no other employer-

funded pension care. For these employees, K+S pays extra employer’s contributions for

old-age pensions. The additional cover under K+S VorsorgePlus is available to all employ-

ees of the K+S Group, so that by means of own fi xed monthly payments in the framework

of converting remuneration into pensions they can obtain additional pension cover.

Since 1 January 2007, the children of deceased employees can also receive assistance

from K+S VorsorgePlus. With this voluntary service, we want to fulfi l our special respon-

sibilities towards our employees and provide the children of deceased employees, above

all, with initial help in obtaining the best possible training. The payment of this aid and

its amount depend on the individual income situation of the family concerned. Possible

payments are oriented towards the granting of statutory child benefi t and are made up

to the age of 18 – and maximally up to the end of the 25th year of one’s life.

Chemical Pension Funds

In 2002, at the initiative of the IG Bergbau Chemie Energie trade union (IG BCE) and the

German Federal Employers’ Association of the Chemical Industry (Bundesarbeitgeberver-

band Chemie BAVC), the Chemical Pension Fund (Chemie Pensionsfonds) was founded,

the fi rst German pension fund. Varying contributions from one-off payments may be

made into the fund each year within the framework of converting remuneration into

pensions.

Direct insurance

After the regulatory framework governing direct insurance changed in 2005, the Salary

Conversion Direct Insurance hitherto offered by K+S had to be withdrawn. With the con-

clusion of a new group agreement that is advantageous for employees, we have created

the possibility of concluding direct insurance under the new legal requirements from

2006 on. In contrast to the previous Salary Conversion Direct Insurance, higher sums can

be converted and in addition, their full amount is paid into the insurance free of taxation.



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Supported part-time employment

Since 2000, we have been offering our older employees supported part-time employ-

ment. In the so-called block model, the employees in the fi rst half are in full-time em-

ployment, and are released from the obligation to work in the second half. Employees

are thus able to retire up to three years earlier. Their vacated posts are preferably fi lled by

young employees who have received training from the company. Within the framework

of the statutory possibilities with regard to refi lling, at K+S part-time employment for

people approaching retirement is subsidised by the Employment Agency. Until now, the

Employment Agency has granted over € 10.1 million in grants, approximately € 3.4 mil-

lion of which were approved in 2006. Since 2000, more than 970 employees have taken

advantage of this part-time employment.

Protecting our employees against work-related dangers and safeguarding their health

by means of preventative measures is of very great importance for us. We strive to meet

these requirements together with the relevant authorities and the accident insurance

bodies (professional associations). Internally, the “Joint Committee for Safety, Health and

the Environment” coordinates all measures, suggests improvements and proposes in-

vestments and regularly evaluates events within the company. (See also page 65, Organi-

sation of work safety, health and environmental protection).

Occupational accidents at a low level

In 2006, K+S recorded 74 notifi able workplace accidents (previous year: 91). Unfortu-

nately, one of the workplace accidents was fatal. The average number of working hours

lost per accident was 242 (previous year: 235). The number of accidents to and from work

fell by 10 to 19. The number of accidents involving employees from external companies

rose to 28 (previous year: 22). At 40%, most of the accidents involved twisted ankles,

followed by accidents involving so-called “mechanical impact”, such as bruising, impact

effects and contact with moving machine parts, which accounted for 25%.

In 2006, we succeeded in keeping the key ratio “occupational accidents per one million

working hours” down to 4.2 (previous year: 5.0).

This is certainly the result of the intensifi cation of dialogue. The conduct of employees at

the workplace is also infl uenced by the behaviour of their superiors. They are therefore

obliged to address their employees directly if their conduct jeopardises work safety and

to make them aware of this danger. If a clear violation would be ignored, an employee

might gain the impression that his conduct is correct or that his superior takes no inter-

est in work safety.



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0

10

20

30

40

19961994 1998 2000 2002 2004

Occupational accidents per one million working hours

Industrial professional associations K+S GroupMining professional association

A table containing details of occupational accidents by site can be found on page 77 of the tabular appendix.

2006

We have also expanded cross-country dialogue. We have established the meeting staged

for specialists in environmental protection and industrial safety from our French, Bel-

gian, Spanish and Portuguese companies as a regular event and created a network.

With these and other measures, we have succeeded in maintaining the accident fi gures

at a very low level, also compared to other industrial companies. From the technical and

organisation viewpoint, we have exploited all possibilities of raising the standard of

work safety. We fulfi l all statutory requirements and our control mechanisms are run-

ning smoothly. Nevertheless, we are not satisfi ed with the level reached, but have set

ourselves the goal of further reducing the number of occupational accidents. To achieve

this, we will have to strike out on new paths: in 2007, we will focus on the topic of behav-

iour-oriented work safety and develop measures that are even more specifi cally designed

to meet the needs of our employees.

“Drive Safely” campaign

In April 2006, we successfully completed the “Drive Safely” campaign launched in co-

operation with the professional mining association. The campaign was designed to

draw employees’ attention particularly to the potential danger of using vehicles in un-

derground and surface mining facilities, but also on public roads. At campaign-related

events staged at sites belonging to Potash and Magnesium Products and Salt business

segments as well as K+S Aktiengesellschaft, rescue simulators, braking and collision sim-

ulators as well as motorcycle and car simulators were available to employees. Informa-

tion stands run by BBG, ACE, Deutsche Verkehrswacht and the Hannelore-Kohl-Stiftung

as well as local police authorities rounded off the events. A total of 3,511 employees

participated in the campaign. In the framework of the closing event, awards were pre-

sented to the winners of an ideas competition in which the employees could point out

unsafe traffi c situations in the company, as well as in the vicinity of its sites and submit

suggestions for improvement.



Practicing for emergencies

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Body workout at Kassel site

Individual hearing protection

Hearing protection tailored to meet the individual needs of each employee has proven

to be the most effective protection against noise. An optimal fi t dampens the harmful

sound waves almost completely. In a cross-site pilot project, over 500 employees are cur-

rently recording their experience with these specially designed earplugs. It is our objec-

tive to establish this hearing protection across the Group as part of personal protective

clothing, just like helmets, goggles and shoes.

EH&S Accident Management

If, despite all preventative measures, an accident occurs at one of our sites, fi rst aid is

organised in accordance with rescue measures which are constantly improved. More-

over, we record and evaluate the relevant data in accordance with our statutory obliga-

tions. Since January 2007, all our German sites have been provided with a new electronic

SAP-based tool, which guarantees more effi cient data management – EH&S Accident

Management. This new system does not only allow us to avoid duplication in the man-

agement of data. The decisive benefi t: more rapidly than before, we can identify recur-

rent causes of accidents and take specifi c steps to prevent them. In 2007, we will start to

incorporate the other European locations into the system.

Internal audits provide safety

With the help of internal audits we check the effectiveness of our measures to protect

the environment and ensure work safety and identify any omissions if necessary. In addi-

tion to the positive experience we have gained with the environmental audits that have

been conducted internally since 2002, 2005 saw the establishment of integrated audits

that focus on industrial safety in addition to environmental protection. All domestic pro-

duction sites – and foreign sites too in the future – are to be audited in a three-year cycle.

Eleven sites were audited in 2006. The audits provide sites with the certainty that all

binding statutory provisions are being complied with and guarantee that employees are

receiving optimal protection from work-related dangers. In 2007, we will also carry out

these audits at the French and Portuguese sites of esco.

Healthy and active employees are the basis for operating successfully and thus impor-

tant for the overall success of K+S. With an effective company health scheme, we can

contribute to keeping our personnel performing effectively and being motivated. A new

group-wide agreement serves as the basis for various preventative measures of company

health management at the individual locations within the K+S Group. In 2006, the rate

of sickness was 5.0% and thus under the level for the previous year (5.4%). The intensifi -

cation of our health-promotion measures has paid off here.




52

Together with the health insurance funds and professional associations, we want to im-

prove the effi ciency of our health care especially in light of the increased requirements in

our companies and longer working hours. We intend to increase the sustainability of the

measures by giving a greater role to management. We regard the promotion of health as

a management task, too.

Tailored prevention

In 2006, the Werra plant developed a programme for company health promotion which

consists of several building blocks. The main components are opportunities to improve

fi tness, maintain a healthy lifestyle, give up smoking and deal with stress. The programme

is linked to the bonus system of the miners’ health insurance so that the participants

have an added fi nancial incentive. In light of the positive response to the programme, we

will again establish a preventative programme for our employees in the second quarter

of 2007.

fertiva also launched its company health management in 2006. This instrument net-

works closely with occupational health and safety and with the advice and care provided

by occupational medicine. In the future, health days, seminars, training sessions and

check-ups will be implemented. Furthermore, we hope that employees will be interested

in joining health circles, which will meet on a voluntary basis.

At our Kassel site, we further developed the “Active and fi t” programme in 2006. In

addition to relaxation techniques, a weekly body workout and a Nordic walking course

are offered.

Preventative occupational medicine goes without saying

At K+S in Germany, occupational medical care is provided by 19 doctors, who are co-

ordinated by the Physician-in-Chief, so that there is uniform occupational medical care

across the Group. Our company physicians provide support to the Board of Executive

Directors and the company managements on all issues of work safety and health protec-

tion, e. g., the organisation of workplaces, and assist employees with limited capabilities,

as well as employees with work-related illnesses.

Regular mandatory check-ups are an important instrument in occupational medicine for

the early detection of health defects and for minimising the risk of vocational diseases

and work-related health risks. The internal company check-ups go far beyond the statu-

tory check-up requirements. In 2006, 6,201 check-ups were carried out by doctors on K+S

employees; 4,406 of them disclosed no health symptoms that could affect their work.



Programme for promoting health at the Werra plant

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Taking measurements using laser underground

In 1,284 cases, medical clearance was conditional while doctors issued a “limited health

clearance” to 325 employees, and in 186 cases they diagnosed chronic health problems.

The medical reports on the check-ups disclosed results that were well above the average

in other mining companies and in the rest of trade and industry.

No health impairments resulting from DME and nitric oxides

Between 1992 and 2002, K+S medical services conducted 60,000 preventative check-ups

that also investigated substances that have a toxic effect on the lungs. The relevant sub-

stances in the underground mining of potash and rock salt are diesel motor emissions

(DEM), nitric oxides (NO and NO2) and carbon monoxide (CO), as explosive dust and diesel

exhausts are released in our mines as a result of employing explosives to extract crude

salts and the use of diesel-powered vehicles. During the regular preventative check-ups,

no lung diseases causally related with mining activity were identifi ed.

A monitoring concept introduced in 2003 which applies to all the German production

sites of the Potash and Magnesium Products and Salt business segments ensures that

concentrations of harmful substances in the underground air are determined and docu-

mented at regular intervals, and that the permissible exposure levels in force at the mo-

ment are defi nitely complied with.

Our check-up fi ndings are confi rmed by the Institut für Gefahrstoff-Forschung (Institute

for Hazardous Substance Research), operated by the BBG (professional mining associa-

tion), which determined underground concentrations of salt dust, DME, nitric oxides and

carbon monoxide in extensive measuring processes and examined employees for pos-

sible impairment. The effects were classifi ed as weak in the fi ndings. However, smoking

has proven to be an important factor in the development of chronic lung disease. These

fi ndings act as an incentive for us to intensify our activities in smoking cessation and

protecting non-smokers.

We support the goal of reducing environmental pollution resulting from particles and

nitric oxides. However, such demands must remain realistic. For example, a European

expert group has recommended reducing the thresholds for workplace concentrations

from 5 ppm for nitrogen dioxide, and 25 ppm for nitrogen monoxide, to 0.2 ppm in each

case. There is no basis in science or occupational medicine for this, nor is it technically

or economically feasible. Consequently, the European chemical, automobile and mining

industries are conducting intensive talks with the European Commission to arrive at ac-

ceptable rules that would not jeopardise the continued existence of these industries.



54

Worldwide application advice

By means of intelligent, sustainable fertilizer systems and scientifi cally based advice, we

support our customers all the way to end application. In addition to targeted research

conducted at the Limburgerhof agricultural centre, the results of fi eld tests provide the

basis for fertilizing recommendations tailored to needs. Determining the quantity of nu-

trients required for the soil and plants, and the resulting fertilizing recommendations

are the preconditions for “good professional practice” as defi ned in the German Federal

Soil Protection Act (Bundesbodenschutzgesetz – BBodSchG). We pass on our know-how

to customers and also advise them about new statutory framework conditions. A good

example in this regard is the free consultancy software offered by K+S KALI GmbH and

fertiva. It enables customers to plan fertilization effi ciently and in a computer-based way.

We will be reworking our interactive software this year, so that, in future, fertilization

recommendations can be worked out with the aid of satellite-supported systems and

implemented area-specifi cally using application maps.

K+S KALI GmbH is currently running about 200 fi eld tests all over the world. They demon-

strate that only intelligent fertilization systems can result in a balanced relationship be-

tween economic success and ecological concerns. In particular, our fertilizer specialities

containing magnesium and sulphur have shown that they are very suitable for sustain-

able farming in diverse production systems and under various soil conditions. The vigor-

ous communication of these test results is of growing importance, because under inten-

sive production conditions the availability of just these nutrients declines to a minimum

with the result that the effi cient use of nitrogen is no longer ensured. Moreover, if there

is an imbalance in the supply of nutrients to plants, rising global demands with respect

to the quality of agricultural products cannot or can only be fulfi lled inadequately.

We cooperate closely with local universities and institutes in the design and conduct

of tests. Many tests are carried out directly on the farm under realistic conditions. The

farmer profi ts from the knowledge gained, while the universities receive the publication

rights as well as fi nancial support for graduations and doctoral theses.

In many regions, water has become the limiting factor for agricultural production. In

2006, we particularly addressed the question of how improved effi ciency in the use of

water can be achieved using intelligent fertilization systems. For this, we have investigat-

ed the effect of potassium sulphate (SOP) on dry soil containing salt and demonstrated

that fertilization with SOP leads to higher productivity and improved effi ciency in the use

of water. We are thus making an important contribution to the conservation of water, a

precious resource in some parts of the world.

Application tests by country

Western Europe

Belgium, Denmark, Germany,

France, Great Britain, Ireland,

The Netherlands, Sweden,

Switzerland, Spain

Eastern Europe

Bulgaria, Croatia, Lithuania,

Poland, Romania, Slovakia,

Czech Republic, Hungary

The Americas

Brazil, Chile, Costa Rica,

Ecuador, Colombia, USA

Middle East / Near East

Egypt, India, Iran, Pakistan,

Saudi Arabia, Turkey

Asia / Oceania

Australia, China, Indonesia, Ma-

laysia, New Zealand, Vietnam

Africa

Cameroon, Morocco, Sudan,

South Africa




K+S provides advice at the DLG agricultural fair

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COMPO’s lawn professionals on site

In South-East Asia, over the past year we have started a series of palm oil cultivation

tests in order to investigate the use of fertilizers containing potassium and magnesium

in an optimized cultivation system (best management practice). In South America too,

we were concentrating on tests in the palm oil sector. We have also intensively examined

the effect of the magnesium component in our “Kieserite” fertilizer speciality.

We have intensifi ed our test activities in the Near and Middle East as well as, for the fi rst

time, applied our fertilizers to test areas in Morocco, Cameroon, the Sudan and in South

Africa.

In the case of COMPO, the focus of fi eld tests in 2006 was on the exploration of new

application segments for the stabilized ENTEC® fertilizers. We were able to successfully

complete tests on the use of coated products in plantation forestry for fast-growing re-

newable woods and tropical woods. COMPO also frequently involves local organisations

in the tests and offers them the possibility of cooperating directly in the development

and dissemination of new technologies in the fertilizer segment.

As fi rst step of the provision of serious expert advice to its customers, COMPO offers spe-

cial soil analyses. Thus, towns and local communities are specifi cally approached about

the appearance and conditions as well as possible problems with their sports grounds. If

the advisory offer is taken up, advice on maintenance is provided on site with the collec-

tion of supplemental soil samples. Once the samples are analysed, a written recommen-

dation, based on the available data and containing a detailed annual plan, is prepared,

discussed on site with the customer and support is provided with the preparation of a

tender if need be.

Measurable customer satisfaction

All the business segments regularly ask their customers for their opinion on product

quality and on the related products and services, and this was again the case in 2006.

Apart from analyses of satisfaction and personal talks, customer audits and the com-

plaint statistics provide specifi c starting points for further improvements.

K+S KALI GmbH carried out an image analysis in the German market, both among mer-

chants and farmers. The fi ndings revealed that both groups ascribe a high level of com-

petence to us as fertilizer manufacturers. They rate the quality of our products highly

and our full range of services is assessed as better than that offered by our competitors.

We are currently planning an international image campaign whose design will partly be

based on these survey fi ndings.



56

Analysis at the K+S Research Institute

At COMPO, professional users, hobby gardeners or trading partners were surveyed,

depending on the objective. We have conducted a wide range of studies in order to better

understand our end customers’ wishes, above all in Germany and France. The fi ndings

directly affect the further development of our products; but they can also provide a

stimulus for the development of new products, such as COMPO SANA water storing soil.

fertiva carried out a customer satisfaction analysis among all wholesale customers

in Germany and the Benelux countries. The fi ndings show that, in the opinion of its

customers, fertiva is in a leading position when it comes to the main decision-making

criteria, compared with its competitors. In the future, we will strengthen the positive,

decision-related attributes and exhaust the identifi ed potential for improvement.

Also in the case of esco, a customer satisfaction analysis has revealed the opinion of a

representative set of key accounts from all main sales markets and product areas. The re-

search looked at our performance in terms of product quality, delivery reliability, service

and competence both individually and in comparison to the major competitor in each

case. We were assigned grades of ‘good’ to ‘very good’ throughout; in the most important

fi elds of competence, we did just as well or better than the competition.

K+S Entsorgung GmbH surveyed all German and foreign customers concerning their sat-

isfaction with the company, their requirements and desires. The analysis revealed a very

high level of overall customer satisfaction. Where room for improvement was indicated,

we will shortly be implementing the changes our customers would like to see.

Consumer-oriented information

The effects of mineral fertilizers on customer health are being intensively investigated

during their development and subsequent approval phases. The type and scope of prod-

uct information and declarations are based on such regulations as the Fertilizer Directive

as well as national and EU law. This includes shipping documents and safety data sheets,

including classifi cation in accordance with the Hazardous Substances Ordinance, mini-

mum contents and tolerances. We supplement the legal obligations with specifi c and

consumer-friendly recommendations on correct product use.

In the case of food and feed labelling, we base our practice on EU law. This involves such

areas as product identifi cations, information about the manufacturer or packager, the

list of ingredients and use-by date. Stability tests were conducted on our pharmaceutical

products in accordance with legal requirements; pharmaceutical salts are declared in ac-

cordance with the Ph. Eur. and USP monographs.



Presenting the COMPO SANA water storing soil

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Shareholders at the K+S Annual General Meeting

There are no legal requirements concerning industrial products. Nonetheless, we also

provide technical and safety data sheets for these products. Further information is avail-

able on request.

Food grade salts with fl uorine and iodine

We support the efforts of the WHO, UNICEF and national organisations for the preven-

tion of defi ciency diseases. Our food grade salt is used as a carrier for active substances

iodine and fl uorine. As a member of the German Working Party for Iodine Defi ciency

we inform the population, but also doctors and representatives of nutrition and public

health services about the spread and consequences of iodine defi ciency in Germany and

about ways of countering this. The working party also addresses food manufacturers and

the food industry in general and is furthermore developing initiatives on the legislative-

level. As a member of the German Working Party for Dentistry we contribute to the pre-

vention of caries through interdisciplinary cooperation with dentists and pediatricians

and the public health services.

Through a broad range of communication tools, we inform our stakeholders inside and

outside the company about the latest developments of the K+S Group and engage in an

open, constructive dialogue with all interested groups. The group of our stakeholders

comprises customers, shareholders, our employees, the media, suppliers, the commu-

nities in the vicinity of our sites, trade unions, authorities, as well as political groups,

institutions and associations.

Transparent communications

We provide comprehensive information and service to the print media and television,

and are in continuous dialogue with media representatives. We answer queries from the

press promptly. During our press and analyst conferences in March and November, we

provide analysts and the media with comprehensive information on the course of our

business. During our Annual General Meeting in May we engage in direct contact with

our shareholders and present to them the latest developments within the K+S Group.

For us, investor relations means transparent fi nancial communications for the purpose

of creating confi dence on the capital markets. We systematically foster our contacts with

domestic and foreign fi nancial analysts, institutional and private investors and economic

journalists. In 2006 alone, we staged 33 roadshows and conferences in Germany, else-

where in Europe and also in the United States. Furthermore, we organised numerous

conference calls and face-to-face talks, as well as an analysts’ workshop at one of our

production sites.



58

Our tried-and-tested communications instruments include press releases, individually

produced press packs as well as newsletters, which we send out by e-mail following reg-

istration via the Internet. We also offer all interested parties a comprehensive range of

brochures on our group of companies. We use meetings with the press in connection

with the announcement of acquisitions and the completion of projects to provide jour-

nalists with an insight into the varied activities of the K+S Group.

The print media as well as radio and television continue to display great interest in

our Merkers Adventure Mine. In 2006, reports for science and regional magazines, or

in connection with current events, were also recorded at further sites of the Potash

and Magnesium Products, Salt and Waste Management and Recycling business

segments.

As part of our communications activities, we provide educational publishing companies

with illustrations and text material, especially on the subject of mining, fertilization and

agriculture.

Online offering expanded

An expanded range of information, a fresh new design and up-to-date service in German

and English – these are the features of our website www.k-plus-s.com in the year 2006.

The alternating images from the world of K+S in the side panel are the most striking

feature of the new design. Particularly the contents of investor relations, press and career

have been expanded suitable to the target groups. Shareholders and investors can, for

instance, keep themselves informed on a daily updated basis about the contents of the

respective roadshow presentation. Under the rubrics Topics and Background, journalists

can obtain reader-friendly and illustrated information about topics from the world of

K+S. Potential applicants can fi nd useful information about the various ways of entering

K+S and career opportunities. The newest service includes a world map with all K+S sites,

company fi lms that can be downloaded in several formats, a comprehensive photo-gal-

lery, the RSS newsfeed, as well as the possibility to automatically transfer data from the

timetable to the Outlook calendar. Audio and video sequences as well as the live broad-

casting of conference calls and our analyst conferences had already proven popular on

the previous version of our homepage.



The new K+S homepagewww.k-plus-s.com

Film crew recording underground

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Following careful research and comprehensive editing work, we have published the company history of the K+S Group in a high-quality volume. The leitmotif of the K+S Group – “Experience Growth” – is also the title of this book. With this volume, we invite readers to accompany us on a journey through time and experience 150 years of our company’s growth and change. From the early days of the potassium industry in Germany through to the expansion of the K+S Group as on of the global leaders in the provision of fertilizers, plant care and salt products. We consider it important that this process of development, with its sometimes dramatic events, be recorded as objectively as possible for up and coming generations. We particularly want to convey the political convulsions of our recent history and their effects on our K+S Group to all employees and partners.

The K+S company chronicle “Experience Growth” (ISBN 3-9809738-1-6) can be ordered from the Ulmenstein publishing house (contact person: Mr. Hohmann, Haardtweg 5, D-36088 Hünfeld) at the price of € 39 and is also available in bookshops.

Active employee communications

Our employee newspaper “K+S information” was published six times in 2006. Our French

Group companies are offered a newsletter in their national language three times a year.

Our subsidiary esco also informs its employees about important company developments

in a multilingual newsletter. Following the acquisition of Sociedad Punta de Lobos, K+S

has introduced itself to its new employees in Chile, Brazil and the United States in a

newsletter published in three languages.

Close contact with customers

As part of our trade fair activities, we cultivated close contacts with our customers and

end-users also in 2006. Highlights for the fertilizer trade were the DLG fi eld days and

Potato Europe in Germany, and of particular interest for COMPO were the IPM and gafa

trade fairs. K+S KALI GmbH and COMPO were represented at fairs of regional and nation-

al importance not only on the important French agricultural market, but also in Poland,

Hungary, Spain, Italy and Iran. K+S KALI GmbH and esco presented our range of prod-

ucts for the pharmaceutical industry at the pharmaceutical trade fair CphI Worldwide in

France. The international winter road clearance congress in Italy was an important date

for the esco subsidiary Deutscher Straßen Dienst; as was Entsorga-Enteco in Germany for

K+S Entsorgung GmbH.

K+S Entsorgung represented at a trade fair



60

Safeguarding of interests at EU level

K+S accompanies the legislation of EU institutions from the draft stage onwards, chiefl y

on the subject of environmental and health protection as well as occupational safety.

Membership of the relevant employer and industrial associations is for us the most ef-

fective and successful way to look after our interests. Many objectives can only be real-

ised jointly. In addition, representative bodies can generally set out their position before

changes in the legislative framework enter into force.

We take part in so-called stakeholder conferences at the invitation of the EU Commis-

sion, as well as in its consultative meetings and keep in direct contact with members

of the European Parliament and European Commission. The joint positions of the social

partners are communicated to the EU Commission via the “Social Dialogue on Mining”

in which the members of the European mining associations and the Employee Organisa-

tion of European Mining are represented. Our aim is to be informed early of any legisla-

tive initiatives which require us to adjust our activities, or exert infl uence on the drafting

of legislation directives or regulations which could affect the activities of the K+S Group.

On a national level, in connection with the implementation of EU directives, there are

regular exchanges with the Association of the Potash and Salt Industry, the industrial

association Agrar as well as the bodies of the Federation of German Industries (BDI), the

Department of Mines and other state authorities. At an international level, we cooperate

closely with EU associations, such as Euromines and EuSalt.

REACH comes into force

Among the EU directives relevant to K+S is the REACH Chemicals Directive, which is to

come into force on 1 June 2007. In contrast to European guidelines, directives apply in EU

member states directly after their adoption. As of June 2008, a new chemicals authority

in Helsinki will include in a database all 30,000 substances which are to be registered and

controlled by REACH.

The burden of proof for the non-hazardous nature of substances lies with the manufac-

turers and importers. Particularly dangerous materials shall, if possible, be replaced by

less harmful substances. Substances which can cause cancer, harm genes or impair the

ability to reproduce are regarded as particularly dangerous. In addition to registration,

REACH requires the approval of these groups of substances by the respective manufac-

turers or importers.

K+S has already started preparing for REACH and its consequences during the legislative

phase. In comparison to other branches of industry, we are affected by this directive to

a lesser extent. Most chemical substances that we produce either fall under the exemp-

tion rules (“... naturally occurring substances insofar as they have not been chemically



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changed or are not hazardous ...”) or have to be registered by an upstream supplier. The

registration costs for approximately 13 substances to be registered can, as provided for

by the legislation, be shared with other manufacturers of the same substances. The reg-

istration period of high-volume materials (> 1,000 tonnes per manufacturer each year)

extends to the years 2008 through 2010 and, for the production quantity of 100 to 1,000

tonnes, until 2013. In preparation for the registration of each substance, professional

users are obliged to provide the manufacturer or further user with information about

exposure and risks associateded with handling the materials.

Memberships

K+S is a member of the following associations and federations, among others: ABIPA

(Association Belge de l’Industrie des Produits Azotés), APEP (Association des Producteurs

Européens de Potasse), APIC (Active Pharmaceutical Ingredients Committee), Arbeits-

kreis Jodmangel, BDE (Bundesverband der Deutschen Entsorgungswirtschaft), BDI

(Bundesverband der Deutschen Industrie), BHB (Bundesverband Deutscher Bau-, Heim-

werker- und Gartenfachmärkte), BVE (Bundesvereinigung der deutschen Ernährungs-

industrie), Bundesvereinigung Torf- und Humuswirtschaft, DGAW (Deutsche Gesell-

schaft für Abfallwirtschaft), DGMT (Deutsche Gesellschaft für Moor- und Torfkunde),

DVGW (Deutsche Vereinigung des Gas- und Wasserfaches), EFMA (European Fertilizer

Manufacturers Association), Euromines, EuSalt (European Salt Producers’ Association),

FGSV (Forschungsgesellschaft für Straßen- und Verkehrswesen), GDMB (Gesellschaft

für Bergbau, Metallurgie, Rohstoff- und Umwelttechnik), IFA (International Fertilizer

Industry Association), IHK Industrie und Handelskammer Kassel, IPI (International Potash

Institute), IPS (International Peat Society), IVA (Industrieverband Agrar), IVG (Industrie-

vereinigung Garten), Markenverband, NUMOV (Naher und Mittlerer Osten Verein), Salt

Institute, sdw (Stiftung der Deutschen Wirtschaft), SOPIB (Sulphate of Potash Informa-

tion Board), UNIFA (Union des Industries de la Fertilisation), VAR (Verband der Aluminium-

recyclingindustrie), VCI (Verband der Chemischen Industrie), VDE (Verband Deutscher

Elektrotechniker), VDI (Verein Deutscher Ingenieure), Verband Deutscher Garten-Center,

VKI (Verein für Konsumenteninformation) and VKS (Verband der Kali- und Salzindustrie).

Good contacts with the community

Dialogue with elected representatives, i. e. municipal, state and federal politicians, is par-

ticulary important for our company and site operations. The relevant authorities are also

consulted over and above our reporting duties, usually prior to decision-making. At our

special biannual conference for the representatives of authorities, we report on our ac-

tivities in the area of safety, health and the environment.



62

We maintain good neighbourly terms with residents living close to our sites and take any

complaints from local residents very seriously. In our efforts to achieve amicable solu-

tions, we examine the problem and, if necessary, also arrange analyses by independent

outside bodies. Generally, we are also ready to debate important projects with various

interest groups and initiatives in public panel discussions.

The open and engaged communication within the framework of the controversial

projects of the “pile waste water pipeline” (see page 28) and the “Wintershall heating

plant” (see page 22) has been a signifi cant aspect of our work in 2006. In addition to

informing the press as well as diseminating fl yers, we have strengthened our dialogue

with all groups concerned, especially in the Werra valley. This includes citizen assemblies

and meetings with elected municipal offi cers.

We make the granting of sponsorship dependent on whether the involvement fi ts into

our sponsorship strategy and whether there is a relationship to our business operations.

Our sponsorship strategy aims to provide support for cultural and sports events staged

in the vicinity of our sites. The sponsoring of youth sport is the focus of our activities. In

this way, we actively sponsored some 40 youth sports teams in 2006.

Further, our sponsorship activities in 2006 included support for the “Kassel Museum

Night” and the “Kassel Music Days”, the “Saddle Festival” of the Kassel regional council,

the “German Language Cultural Prize” and the “Clean Hesse” campaign.

Schools and business

In addition, we support local schools, for instance, through further training for teachers

and project sponsorship. It is our goal to increase pupils’ understanding of the relation-

ships between business and technology.

Currently we have initiated cooperation with the Werratal school in Heringen, which in

the future will offer a dual qualifi cation with the German high school diploma and CTA

(chemical-technical assistant) curriculum. The practical part of the training is completed

by the pupils in the laboratories of the K+S research institute in Heringen or in the Werra

plant. All participants will benefi t from the offer: such training opens up excellent op-

portunities for pupils on the job market; the Werratal school is gaining new prospects for

the future; and K+S can benefi t from having qualifi ed future employees on its doorstep

for the challenging tasks to be carried out in its laboratories.




Youth team wearing K+S shirts

Training at K+S laboratories

63


The term “Corporate Governance” denotes responsible and transparent corporate man-

agement and control oriented towards the creation of long-term value. These principles

have formed the basis of our decision-making and control processes for a long time. For

K+S, the relevant regulations, especially the legislation that governs joint-stock corpora-

tions, co-determination and capital markets, our articles of association, the bylaws of

the Supervisory Board and the Board of Executive Directors and the German Corporate

Governance Code, have formed the basis on which management and control within the

company has been shaped. Further information about this topic can be found in our

2006 Annual Report.

The business segments and holding functions of the K+S Group cooperate in a matrix

organisation with equal rights and in the interest of the Group. The Board of Executive

Directors is responsible for the overall results of the K+S Group and leads the heads of

the business segments and holding functions, both in professional as well as disciplinary

terms. The ogranisational chart defi nes the departmental responsibilities of the mem-

bers of the Board of Executive Directors. The respective area and scope of responsibility

of the senior executives of the business segments and holding functions are established

by the relevant members of the Board of Executive Directors through descriptions of

their functions. The senior executives of the business segments and holding functions

are responsible for their results and costs and manage their subunits in a professional

and disciplinary manner.

The Supervisory Board (monitoring and accompaniment of the long-term direction of

the Group in dialogue with the Board of Executive Directors) and the Board of Executive

Directors (development of the long-term direction of the Group in consultation with the

Supervisory Board and responsibility for the operational implementation of the compa-

ny’s strategy and monitoring of the development of business segment strategies) are

responsible for establishing the company’s strategy and supervising its organisation.

Each area of responsibility is established in the Articles of Association of K+S Aktienges-

ellschaft, the organisational chart and the allocation of responsibilities within the Board

of Executive Directors and the bylaws of the Supervisory Board. The guidelines of the

commissions A (acquisitions) and I (investments) are also important for the company’s

management. In the economic committee, the employees’ representatives are informed

comprehensively about all fi nancial matters.

Uniform compliance in the interest of the Group

For us, compliance, meaning the obeying of laws by the company and its governing bodies

and employees, is a matter of course. A functional unit based in the holding company has

the task of further developing current instruments used to ensure lawful operation into

a closed, company-wide compliance system. Among other things, this functional unit

serves employees as a contact point for rapid and competent clarifi cation of issues.


Supervisory Board Chairman Gerhard R. Wolf (front, second from right)

in discussion with executive personnel

64

Code of conduct comes into force

Customers and partners acknowledge the high level of corporate competence of K+S in all

segments. Maintaining and further developing this depends on each individual employee

acting with integrity and a sense of responsibility. Within the framework of the compliance

program, we established principles of conduct in 2006 that supplement the most impor-

tant fundamental values of the K+S Group’s corporate policy as well as basic legal and

ethical obligations, which every individual employee of the K+S Group must comply with.

These principles of conduct are published on our homepage www.k-plus-s.com.

The principles of conduct expressly reject any discrimination. To this extent, they also act

as a guarantee of the diligent implementation of the General Equal Treatment Act, which

came into force in Germany in August of last year. In the course of implementing this act,

K+S has set up the prescribed complaints offi ces at all of its German locations. The AGG

will in future be covered in the framework of management training and of seminars for

trainees and on employment law. We have also checked whether our complaints man-

agement is in harmony with the new law.

Identifying opportunities – uncovering risks

Risk and opportunity management are closely interlinked within the K+S Group. We

essentially derive our opportunity management from the goals and strategies of our

business segments and ensure an appropriate relationship between opportunities and

risks. Direct responsibility for the early and regular identifi cation, analysis and manage-

ment of opportunities rests with the operational management of the business segments

and/or the central holding units, forming an integral part of the group-wide planning

and management systems.

Our business segments have different opportunity and risk profi les and to identify them

in good time as well as to assess and limit them, we use our uniform planning, manage-

ment and control systems. The methods used for identifying risks extend from analyses

of markets and competition, through close contacts with customers, suppliers and insti-

tutions to observing risk indicators in an economic and socio-political context. Risks are

assessed on the basis of a potential likelihood of materialisation of 5% or more and on

loss levels differentiated according to business segment. The possible non-recurring or

recurring impact on company objectives is processed in preparation for the adoption of

decisions. A further building block of risk management is the development of counter-

measures for alternative risk scenarios. We are thus able to counteract risks in a system-

atic and methodical manner and to exploit opportunities consistently. The detailed Risk

Report can be found in our Annual Report 2006.


K+S Aktiengesellschaft headquarters in Kassel

65

Organisation of occupational safety, health and environmental protection

In the K+S Group, occupational safety, health and environmental protection rest on three

pillars. The highest body is the “Joint Committee for Safety, Health and Environment”,

equally composed of senior executives and employee representatives and headed by a

member of the Board of Executive Directors. The committee has a coordinating function,

encourages improvements and investments, and regularly assesses the operating re-

sults. The functional unit “Environment, Occupational Safety and Quality Management”

coordinates the cross-segment activities and provides professional support to the third

pillar, the experts, representatives and committees employed at the sites. Several times a

year, the functional unit invites the experts from all locations to a meeting to exchange

their experiences. The environmental and occupational safety committees of the sites

are staffed by site managers, the management teams, the relevant experts and repre-

sentatives as well as members of the works council.

Further institutions are the Safety Health Environment competence centre, a body of

experts for the pooling of knowledge in the areas of occupational safety, health and envi-

ronmental protection, and the standing Committee for Personal Protective Equipment.

The statutory basis of our operations in potash and rock salt mining are the Federal

Mining Act and its supplementary directives, which lay down the statutory duties and

responsibilities of an entrepreneur and stipulate the formulation of the relevant busi-

ness planning.

The company’s guideline relating to safety, health and environmental protection provides

a group-wide obligatory framework for activity for all employees and serves as the ba-

sis for internal regulations and guidelines. This guideline is published on our homepage

www.k-plus-s.com. We have supplemented the guideline with a further guideline in

which we describe for our business segments and units in a comprehensible way how

we want to fulfi l our obligations in these area. It prescribes the minimum standard for

safety, health and environmental management in the K+S Group and is binding for all

domestic and foreign locations. The corresponding manual together with the procedural

and work instructions specify the basic requirements and responsibilities.

Integrated management systems

The future integration of the various management systems in the areas of safety, health,

environment and quality is an essential objective for creating synergy potentials and

simplifying processes. This includes particularly the setting up of a comprehensive audit

system at our domestic sites and abroad through which we can demonstrate that all our

companies and sites possess a suitable management system that ensures legal compli-

ance in this area. 2005 saw the establishment of integrated audits focusing on environ-

mental protection and industrial safety to the same extent.


Exchanging experience on the subject of environmental protection

66

Quality management systems have been introduced at all K+S Group sites. Decisions on

the certifi cation of a site or product area are taken on a case-by-case basis. In 2006, 30.5%

of the K+S Group’s employees were working in certifi ed areas. Over 80% of all production

sites possess, at least in sections, a QM certifi cate under ISO 9001:2000. In 2006, we re-

vised our QM guidelines and published them on our homepage www.k-plus-s.com.

In particular in the area of food and feed as well as pharmaceutical substances, we have

taken into account the more stringent requirements in the past few years and, in addi-

tion to the QM certifi cation, acquired a number of specifi c certifi cates. Recognised cer-

tifi cates are rapidly gaining in importance and thus constitute a decisive competitive

advantage.

K+S KALI GmbH has commissioned a surveillance audit for those industrial products cer-

tifi ed in accordance with DIN EN ISO 9001:2000 and has obtained for its feed the inter-

nationally recognised certifi cations in accordance with the German QS standard and the

Dutch quality mark GMP13. They therefore meet the strict requirements in the area of

animal feed. Last but not least, we are thus making an active contribution to combating

the constantly recurring feed scandals. Moreover, K+S KALI GmbH possesses the kosher

and halal certifi cate.

In 2006, quality management at esco was emphasised by successful re-certifi cation in

accordance with DIN EN ISO 9001:2000. The product safety system HACCP (hazard anal-

ysis, critical control points), the Öko-Landbau-Verordnung, International Food Standard

(IFS), GMP13, QS standard have been adjusted in accordance with the EU directives and

the resulting national regulations. The auditing of the systems went well and all certifi -

cates were prolonged.

For all pharmaceutical products of the Potash and Magnesium Products and Salt busi-

ness segments, we abide by the stringent GMP guidelines (ICH-Q7a). Since October 2005,

an EU directive governs the quality and quality assurance parameters for all substances,

which are used in the medicinal area as active pharmaceutical ingredients. The produc-

tion of these substances is concentrated at the esco sites in Borth and Dombasle as well

as at the potash sites in Wintershall and Hattorf. Additionally, K+S KALI GmbH submit-

ted last year to the strict evaluation of the U.S. Food and Drug Administration (FDA) and

has been accepted as a supplier for pharmaceutical products for the important overseas

market.


Producing pharmaceutical salt at the Borth site

67

Almost all production sites possess a documented environmental management system

according to ISO 14001. Over and above that, safety management systems were intro-

duced at most German sites in 2005. The two systems complement our QM systems and

give our stakeholders certainty that we carefully plan, control and improve our processes

in order to achieve effi cient and high-quality performance in an environmentally-friend-

ly, safe and responsible manner. For the time being, no certifi cation of the environmental

and safety management systems is planned, because this formality is neither expected

to bring any economic or organisational advantages nor have a positive impact on safety

and the environment. Although these systems are not certifi ed, all formalities required

by the norm will be complied with.

Procurement guidelines

We engage in systematic supplier selection and development. Our focus in this regard

lies on long-term cooperation with both local and global suppliers. Our relationships

with suppliers are marked by open and honest dealings with each other. In the event of

a breach of confi dence or a failure to observe our guidelines, we reserve the right to ter-

minate existing supply contracts at short notice. Apart from the ecological and economic

aspects of procurement, we also attach great importance to social aspects. When draw-

ing up contracts, we consider not just the environmental friendliness of our products and

of the supplier, but also an adherence to safety standards. We also strictly ensure that

our suppliers observe those principles that – for a company operating worldwide such as

ours – are a matter of course. These include most of all compliance with human rights

and internationally recognised labour standards professed by the ILO (International La-

bor Organisation). Our meaningful supplier appraisal system ensures that only effi cient

suppliers who comply with our requirements are selected for a long-term, economically

reasonable and low-risk partnership.


Analysis at the K+S Research Institute

68 Glossary

Brine Aqueous rock salt solution. It is obtained through drilling underground

deposits of brine or through the controlled drill-hole solution mining

procedure, and also produced through the dissolution of mined

rock salt.

Dividend Part of the balance sheet profi t, which is paid out to the shareholders

EBIT I The operating earnings of the K+S Group

ESTA® A process developed and patented by K+S, which separates the potash

crude salts with the aid of an electrical voltage fi eld without using

water and thus helps to protect the environment.

Evaporated salt The production of evaporated salt occurs through the evaporation of

saturated brine, from which the NaCl crystallises.

Fertigation Fertilization via the irrigation system (intake of nutrients via the roots)

Freefl oat The number of shares not held by major shareholders, who hold more

than fi ve percent of the shares of a company (exception: shares held

by investment companies and portfolio managers).

GRI Global Reporting Initiative. A globally established standard for

sustainability reporting

Injection of The procedure for disposing of waste water in layered dolomite.

saline water

K2O Dipotassium oxide. Not naturally occurring; chemical unit of calcula-

tion used to distinguish between substances containing potassium,

so that, e.g., production quantities can be determined precisely. The

higher the K2O-content of a product, the higher also is its potassium

content.

Kieserite Mineral component of crude salt

Layer dolomite Layer of dolomitic limestone formed in the zechstein, high fi ssure and

pore volume, often strongly aquiferous.

Rock salt Sodium chloride, table salt (NaCl)

Zechstein More recent section of the Permian, 270–259 million years ago. All

German potassium deposits arose in the zechstein except for the

Upper Rhein region.

Glossary

69GRI Reference Indikators

GRI Guidelines

The guidelines of the Global Reporting Initiative (GRI) are internationally recognised guiding

principles for sustainability reporting. They propose reporting principles and specifi c contents

designed to increase the comparability of company reports and improve the quality and the

accuracy of reports. Although these guidelines are applicable to all companies, they cannot

take into account the specifi c requirements of individual industry sectors such as the ferti-

lizer and salt industry. Therefore, although we have aligned our reports with the guidelines

as far as possible, we have in addition included aspects in our reporting that are of particular

relevance for the K+S Group.

GRI element

1. Vision and Strategy

1.1 Statement from the Board

1.2 Opportunities, risks and

key impacts

2. Organisation Profi le

2.1 Name of reporting organisation

2.2 Major products and services

2.3 Operational structure of the

organisation

2.4 Headquarters of our company

management

2.5 Countries in which the

company is represented

2.6 Nature of ownership

2.7 Nature of markets served

2.8 Scale of the reporting

organisation

2.9 Signifi cant changes in com-

parison to the last report

2.10 Prizes / awards received in the

reporting period

Explanation

Preface

Sustainable development – An opportunity and a challenge

K+S Group

Our group of companies

Our governance structures and management systems

Kassel, Germany

Our locations

K+S share

Our markets

Number of employees: 11.873

Products produced: 7.8 million tonnes potash and magne-

sium products, 9.3 million tonnes salt products, 4.1 million

tonnes nitrogen fertilizers (not own production), 1.5 million

tonnes potting soils and plant care products

Revenues: € 2,957.7 million

Total capitalisation:

€ 1,124 million equity

€ 822.1 million non-current debt

€ 884.5 million current debt

New dimension in the global salt business

Strategist of the Year, design prizes, ERIH Network,

Academy of Geosciences/National Geotope, dib award

Page

2

4

9

63

14

17

16

18

18, 20,

30, 33, 45

70

Reporting Profi le

3.1 Reporting period

3.2 Date of most recent previous

report

3.3 Reporting cycle

3.4 Contact person

Report Scope

3.5 Procedure for defi ning

report content

3.6 Boundaries of report

3.7 Information if the report does

not cover all company activities

3.8 Comparability of the reporting

with the previous year

3.9 Methods of data collection

3.10 Changed presentation of a fact

in comparison to the last report

3.11 Changes from previous years

in the measuring technique,

changes to the delimitation of

the report etc.

GRI Index

3.12 Tabular list of GRI criteria

External auditing

3.13 External verifi cation of the report

Governance

4.1 Governance structures within

the organisation

4.2 Statement of whether the Chair-

man of the Board of Executive

Directs holds a position in the

operational management

4.3 Independent members of the

highest management body

4.4 Mechanisms for shareholders

to provide recommendations

to the Board of Executive

Directors / Supervisory Board

The year 2006

March 2006

Annual

Imprint

We base our decisions on the GRI guidelines

See also: questionnaire

Group-wide reporting

The activities of Sociedad Punta de Lobos are only

partly included in the reporting. Full inclusion as of

Sustainability Report 2007

First-time inclusion of Sociedad Punta de Lobos

In addition to the current key fi gures, we normally offer

a comparison to the previous year. In environmental

reporting, we cover a period of fi ve years.

No change of a fact

First-time inclusion of Sociedad Punta de Lobos

GRI guidelines

The report has not been audited by a third party


See Annual Report, Corporate Governance

Does not apply to K+S ( no unitary board structure)

Our Investor Relations team is always available to answer

questions from shareholders. Institutional investors can

also talk to the Board of Executive Directors personally.

At the Annual General Meeting, the shareholders decide

on the basic business issues of K+S Aktiengesellschaft by

exercising their voting rights. In this regard, each share-

holder may raise questions and submit motions.

U3

79

69 ff

63

3. Report Parameters

GRI Reference Indikators

4. Governance structures, Obligations and Engagements

71

4.5 Linkage between the Board of

Executive Directors’ bonuses

and achievement of goals

4.6 Mechanisms for preventing

confl icts of interest in the

Board of Executive Directors /

Supervisory Board

4.7 Process for determining the ex-

pertise of members of the Board

of Executive Directors / Super-

visory Board for the formula-

tion of the corporate strategy

4.8 Mission statement and Code

of Conduct

4.9 Process for monitoring sus-

tainable company performance

and identifying and monitoring

risks and opportunities

4.10 Assessment of the performance

of the Board of Executive Direc-

tors/Supervisory Board with

regard to economic, ecological

and social performance

Commitments to external initiatives

4.11 Uncovering risks and identifying

opportunities (precautionary

principle)

4.12 Voluntary agreements, prin-

ciples or initiatives

4.13 Memberships in industrial

associations

Stakeholder engagement

4.14 List of stakeholders

4.15 Basis for identifi cation and

selection of major stakeholders

4.16 Approaches to stakeholder

consultations

4.17 Type of information generated

by stakeholder consultations

and the reaction of the com-

pany to it

The remuneration system for the Board of Executive

Directors consists of the following elements:

• Regular monthly payments (fi xed salary) plus in-kind

benefi ts

• Performance-related, non-recurrent remuneration;

bonuses are based on return on total investment and

an individual performance component and paid in the

following fi nancial year

• Non-recurrent remuneration deriving from the exercise

of stock options


Not specifi ed

Mission Statement, Code of Conduct

www.k-plus-s.com/en/about/grundwerte/

Identifying opportunities and uncovering risks


Identifying opportunities and uncovering risks

Product Stewardship

Memberships

Employees, customers, shareholders and investors, media

representatives, communities in the vicinity of sites,

elected representatives, education and research

See also: Active Dialogue with our Stakeholders

Our stakeholders include all groups whose activities affect the

K+S Group. See also: Active Dialogue with our Stakeholders

Active Dialogue with our Stakeholders

Questionnaire

Measurable customer satisfaction

Active Dialogue with our Stakeholders

Questionnaire

U2, 64

64

64

33

61

57 ff

57 ff

57 ff

79

55

57 ff

79


72

Economic Performance Indicators

Financial Performance

EC 1 Earned and distributed value

EC 2 Economic effects, risks and

opportunities of climate

change

EC 3 Pension provisions /

retirement provisions

EC 4 Subsidies or other fi nancial

support by the government

Market presence

EC 6 Donation practice to local

suppliers

EC 7 Procedure in appointing local

employees and proportion of

local managers in important

subsidiaries

Indirect economic effects

EC 8 Infrastructure investments

Environmental Performance Indicators


EN 1 Materials consumption

EN 2 Proportion of recycled material

in whole materials consumption

Energy consumption

EN 3 Direct energy use by energy

source

EN 4 Indirect energy use by energy

source

Water consumption

EN 8 Water consumption by origin

Biodiversity

EN 11 Location and size of owned

land with high level of bio-

diversity

EN 12 Impacts on biodiversity

Value creation

Essentially, the effects of climate change cannot be fully

grasped. Climate change is, however, probably exacerba-

ting the problem of a shortage of water resources. K+S is

conducting research into intelligent fertilization systems

with which an improved use of water is achieved.

Personnel expenses fallen


K+S receives no subsidies; however, funds for investments

are provided at federal and state level to K+S


Code of Conduct


Not specifi ed

Site: Wintershall heating plant

Site: Disposal of saline rainwater from the Neuhof tailings pile


Recycled materials

Energy consumption

Energy consumption

Water usage

Not specifi ed


18

40

47

67

64

22

28

35

35

35

35

36

32


5. Performance Indicators (key indicators)

73

Emissions, waste water and waste

EN 16 Direct and indirect emissions

of climate-related gases

EN 17 Further indirect emissions of

climate-related gases

EN 19 Ozone-depleting substances

EN 20 NOx/SO

x and other air emissions

EN 21 Discharges to water

EN 22 Amount of waste

EN 23 Spills of chemicals, oils

and fuels

Products and Services

EN 26 Initiatives to diminish environ-

mentally relevant impacts of

products and services

EN 27 Products sold that are recy-

clable at the end of the pro-

ducts’ useful life

Compliance

EN 28 Cases of fi nes for noncompli-

ance with environmental law

Overall (add)

EN 30 Investments in environmental

protection and operating costs

for environmental protection

by type

CH4, N

2O, FCKW and SF

6 are not emitted.

For the CO2 emissions see

Emissions

Emissions trading

CH4, N

2O, FCKW and SF

6 are not emitted.

We do not use ozone-depleting substances. We use coo-

ling facilities that are serviced by outside companies and

contain closed-circuit cooling liquid.

Emissions

Waste water

Waste

The combustion of fuels results in the discharge of CO2,

water and soot particles. Oils are not discharged, except in

small quantities via exhaust gases.The auxiliary substances

used in production and fi nishing processes remain on the

product, in solid residue and in the waste water, or is thermally

decomposed during the product drying process. However,

on account of the small quantities used, these substances

remain in the ppm scale in the relevant materials fl ow. In

this respect, the quantity of auxiliary substances used

(81,700 tonnes) approximately equals the quantity discharged.

Consumer-friendly information


Our fertilizers, plant care and salt products are used and

consumed in farming, industry and private households.

There are no cases known

Investments in environmental protection

36

31

36

37

36

56

65

34


74

Labour practices and Decent work

Employment

LA 1 Workforce by structure and

region

LA 2 Fluctuation by age group,

gender and region

Labour/management relations

LA 4 Percentage of employees

represented by trade union

organisations

LA 5 Notice periods, consultation

and negotiation procedures

Occupational health and safety

LA 7 Key fi gures on injuries, work-

related illness, lost days and

absence by region

LA 8 Advice and provision for

employees and their families

in cases of serious illness

Further training

LA 10 Average number of further

training hours per employee

and category of employee per

year

Diversity and Equal opportunity

LA 13 Composition of Board of

Executive Directors/Super-

visory Board/senior manage-

ment and employees by

gender, age, minority

LA 14 Ratio of salaries of male

employees to those of female

employees by category of

employee

Increased number of employees

Not specifi ed


K+S adheres strictly to the binding legal provisions

stemming from the Industrial Constitution Act. Senior

management is represented by the management advice

circle, which corresponds to the representative committee.

Furthermore, employees receive information via publica-

tions and employee meetings.

See also: Co-determination as a constructive partnership

Occupational accidents at their lowest level



Further training for employment abroad

The Supervisory Board consists of 16 members, including

one woman, and is constituted in accordance with the

German Co-determination Act of equal parts of sharehol-

ders’ and employee representatives. The Board of Executi-

ve Directors consists of 5 members.

See also: Number of employees has increased

The same remuneration is paid for the same activities in

accordance with the collective bargaining regulations.

38 ff

46

49

52

52

44

38 ff


Social Performance Indicators

75

Investment and Procurement practices

HR 1 Consideration of human rights

in relation to investments

HR 2 Compliance with human rights

in relation to suppliers and

benefi ciaries of contracts

Non-discrimination

HR 4 Discriminatory incidents and

measures taken

Trade union freedom

HR 5 Locations at which trade union

freedom is jeopardised

Child labour

HR 6 Locations at which the danger

of child labour exists and

countermeasures taken

Forced and Compulsory labour

HR 7 Locations at which the danger

of forced labour exists and

countermeasures taken

Society

Community

SO 1 Programmes to assess and

manage effects of projects /

decisions on the community/

society

Corruption

SO 2 Business segments that have

been checked for risks in rela-

tion to corruption

SO 3 Percentage of workforce,

which is trained in anti-

corruption policy

SO 4 Measures that have been

taken in cases of corruption

Public Policy

SO 5 Participation in the develop-

ment of public order and

lobbying

Anti-competitive Behaviour

SO 7 Inputs against unfair compe-

tition and the creation of

monopolies

Compliance

SO 8 Fines and sanctions for the vio-

lation of laws and guidelines

Code of Conduct



Code of Conduct


No discriminatory incidents in the report period

Trade union freedom in Germany is regulated by constitu-

tional provisions.

See also: Co-determination as a constructive partnership

Code of Conduct


Code of Conduct


Code of Conduct


Code of Conduct


Not specifi ed

No cases of corruption in the report period

Representation of interests at EU level

See Annual Report, Management Report

No cases exist.

64

67

64

46

64

64

64

64

61


Human rights

76

Customer health and safety

PR 1 Examination of individual pro-

duct life phases in relation to

effects on customer health

and safety and percentage of

examined products

Product information and labelling

PR 3 Products and services for

which legal information

requirements exist

Communications

PR 6 Principles/procedures for the

basing of marketing commu-

nication, advertising and spon-

soring on legal or voluntary

guidelines

Compliance

PR9 Fines for the violation of laws

and guidelines in connection

with the provision and use of

products




Code of Conduct


No cases exist

56

65

56

64


Product responsibility

77Figures

Development of industrial accidents (IA) by site

Number of industrial accidents (IA) 2006 2005 2004 2003 2002

Bergmannssegen-Hugo 3 1 2 1 4Hattorf 2 6 4 5 12Grube Hattorf/Wintershall 9 11 6 12 29Neuhof-Ellers 10 3 5 5 13Sigmundshall 11 9 3 8 11Unterbreizbach/Merkers 4 4 6 7 7Wintershall 3 5 9 4 5Zielitz 3 5 7 8 5Kassel 0 0 0 2 0Foreign companies 0 4 0 0 0Potash and Magnesium Products 47 48 42 52 86IA per 1 million hours 3.8 3.9 3.5 4.5 7.2

Gnarrenburg 1 3 6 - -Krefeld 3 3 4 3 4Münster 0 1 0 2 0Uchte 0 2 0 0 1Foreign companies 0 2 0 4 2COMPO 4 11 10 9 7IA per 1 million hours 2.3 5.3 4.7 4.9 4.1

fertiva 0 0 0 0 0IA per 1 million hours 0.0 0.0 0.0 0.0 0.0

Bernburg 8 3 2 2 2Borth 5 10 8 5 2Braunschweig-Lüneburg 0 0 0 3 2Hannover 0 0 0 0 0Ickenroth 1 0 1 3 1Foreign companies 4 8 4 3 2Salt 18 21 15 16 9IA per 1 million hours 7.9 9.2 6.8 7.4 5.8

Waste Management and Recycling 0 0 0 0 2IA per 1 million hours 0.0 0.0 0.0 0.0 13.9

Animal hygiene products 4 2 2 0 1K+S Consulting 0 0 0 0 0CFK 0 0 0 0 0KTG 1 7 2 4 3data process 0 0 0 0 1Services and Trading 5 9 4 4 5IA per 1 million hours 8.2 15.3 7.5 7.9 9.9

Inactive plants 0 1 1 0 0Kassel 0 1 1 0 1K+S AG (Holding) 0 2 2 0 1IA per 1 million hours 0.0 3.1 3.4 0.0 1.5

K+S Group 75 91 73 81 110IA per 1 million hours 4.2 5.0 4.1 4.7 6.6

78

Key fi gures on environmental protection

Specif ic values

Input 2006 2005***) 2004 **) 2003 *) 2002 *)Raw materials used t/t of product 2.7 2.8 2.9 3.4 3.4Total energy kWh/t of product 381.8 385 405 464 473Total water m3/t of product 6.1 6.2 6.4 7.4 7.6Supplies kg/t of product 1.1 1.1 1.1 1.6 1.3Auxiliary materials kg/t of product 4.7 4.8 5.2 5.6 5.7 Output 2006 2005 2004 2003 2002Products million t 17.4 17.1 16.2 13.0 12.8Carbon dioxide kg/t of product 73.2 73 77 89 91Carbon monoxide g/t of product 18.7 19 17 19 19Nitric oxides, as NO

2 g/t of product 97.5 92 92 110 111

Sulphur dioxide g/t of product 2.2 2 2 3 8Hydrochloric acid g/t of product 2.0 2 2 3 3Ammonia g/t of product 0.5 0 1 1 1Dust g/t of product 6.3 6 6 7 8Construction waste kg/t of product 0.3 1.0 0.9 1.6 1.0Reutilised waste, excluding construction waste kg/t of product 1.7 2.1 1.8 1.6 1.8Waste disposed of, excluding construction waste kg/t of product 0.1 0.2 0.3 0.3 0.3Hazardous waste, excluding construction waste kg/t of product 0.3 0.1 0.1 0.1 0.1Total tailings piles t/t of product 1.4 1.4 1.5 1.9 1.9Backfi ll t/t of product 0.2 0.2 0.2 0.2 0.2Cooling water m3/t of product 6.7 7.0 7.5 8.1 8.0Saline waste water discharge m3/t of product 0.4 0.4 0.4 0.4 0.7Saline waste water injection m3/t of product 0.5 0.5 0.5 0.7 0.5

Absolute data

Input 2006 2005***) 2004 **) 2003 *) 2002 *)Raw materials used million t 47.7 47.1 47.4 44.3 42.8Total energy GWh 6,631.0 6,593 6,544 6,047 6,039Total water million m3 106.7 105.8 103.7 96.6 96.8Supplies 1,000 t 19.2 18.4 18.2 21.0 16.8Auxiliary materials 1,000 t 81.7 82.1 83.7 73.0 72.3 Output 2006 2005 2004 2003 2002Products million t 17.4 17.1 16.2 13.0 12.8Carbon dioxide 1,000 t 1,271.2 1256 1252 1160 1158Carbon monoxide t 325.5 330 280 243 244Nitric oxides, as NO

2 t 1,693.5 1578 1485 1423 1418

Sulphur dioxide t 38.5 39 35 38 105Hydrochloric acid t 34.7 31 32 36 39Ammonia t 7.9 5 9 8 8Dust t 109.1 97 99 91 105Construction waste 1,000 t 6.0 16.7 14.9 20.7 12.6Reutilised waste, excluding construction waste 1,000 t 29.4 35.9 29.7 21.2 22.4Waste disposed of, excluding construction waste 1,000 t 1.9 3.8 4.7 4.3 3.4Hazardous waste, excluding construction waste 1,000 t 4.7 1.9 1.7 1.5 1.5Total tailings piles million t 24.2 23.7 24.4 25.0 23.7Backfi ll million t 2.6 3.0 2.7 2.2 2.2Cooling water million m3 117.0 119.2 121.2 104.9 102.5Saline waste water discharge million m3 6.7 6.8 6.5 5.3 8.7Saline waste water injection million m3 7.8 8.0 7.9 9.4 6.4

*) The data on esco sites is included on the basis of the K+S share of 62%**) The esco sites were included in full from 2004***) Includes the K+S KALI & SCPA sites in France from 2005

Figures

79

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2006 2005 2004 2003 2002













The share



Dividend yield 5) % 2.4 3.5 3.3 4.6 5.8

Employees




Capital expenditure













Five-year Summary




phone: +49 (0) 561 9301-0

fax: +49 (0) 561 9301-1753

www.k-plus-s.com

Editor

Katja Seeger

Communications

phone: +49 (0) 561 9301-1322

fax: +49 (0) 561 9301-1666

[email protected]

Photographer

Volker Straub,

Kassel (Germany)

Layout

Roberts


Kassel (Germany)

Printing



Kassel (Germany)

Impint


Revenues 1,238.9 1,197.2 + 3.5

EBIT I 158.6 151.8 + 4.5


Employees 7,550 7,490 + 0.8


Revenues 552.4 541.7 + 2.0

EBIT I 29.2 25.0 + 16.8


Employees 1,260 1,292 - 2.5


Revenues 556.2 568.3 - 2.1

EBIT I 16.7 14.8 + 12.8




Revenues 485.8 398.0 + 22.1

EBIT I 67.6 62.7 + 7.8


Employees 2,194 1,385 + 58.4


Revenues 69.4 56.0 + 23,9

EBIT I 13.8 8.1 + 70,4




Revenues 55.0 54.5 + 0,9

EBIT I 25.4 20.1 + 26,4


Employees 407 393 + 3,6





tical applications.































K+S

Sust

aina

bilit

y Re

port

200

6












K+S



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