ICL to foot bill for rising Dead Sea pool
Company has agreed to shoulder 80% of the NIS 4 billion cost, it said yesterday.
Israel Chemicals will pay 80% of the estimated NIS 3.8 billion in costs to curb the rising Dead Sea evaporation pool and protect the nearby hotels, the company said yesterday after coming to an agreement with the government.
The project entails dredging the salt residue that is causing the pond to rise.
Shares of ICL closed 1.3% higher in Tel Aviv Stock trading yesterday to end at NIS 43.25. The Israel Corporation, ICL's parent company, edged down 0.7% to NIS 2,135.
The government has insisted that ICL bear the brunt of the cost of protecting the hotels, even though the company had no prior obligation to do so.
The project, which requires intricate planning, is expected to take several years to complete, but there's a sense of urgency because the rising pond threatens to flood the resort, a key toutrist detination, by 2017.
The agreement also calls for a 10% royalty on annual potash sales exceeding 1.5 million tons.
The ICL subsidiary Dead Sea Works holds the concession to extract potash from the Dead Sea, for which it has been paying the government 5% in royalties. Previous agreements allowed the government to collect 10% in royalties on annual sales exceeding 3 million tons.
Advocates of the new agreement say ICL has paid NIS 1 billion for its potash concession, representing 8% to 9% of profits from potash activities on a present value basis, so that the total government take from Dead Sea Works has been 35% to 40% of pretax profits. This will now rise to about 60%, the sources say, when taking into account the company's share of dredging costs, reflecting 9% to 10% of its annual income.
The agreement, however, doesn't cover a dispute between the two sides over past royalty payments.
The Finance Ministry says the company underpaid royalties that could amount to $150 million to $200 million through sales generated within ICL Group. ICL denies this, insisting it has paid the government in full. The matter is now under arbitration.