ICL to boost sales by making coal-fueled plants friendlier

Israel Chemicals has come up with a new product with annual sales potential between $400 million and $500 million to help fight mercury emissions by coal-fueled power stations.

The Israeli company is a world leader in bromine and bromine compounds used in fire retardants. Its Industrial Products division produces 30% of the world's bromine, but this dominance has not always translated into shareholder value.

ICL Industrial Products recorded an operating profit of just $5 million (0.7% of revenues) in the first nine months of last year, which was just 0.7% of the ICL Group's overall profit. The division's sales totaled $738 million, or 22% of group revenue.

The meager profits largely stem from ICL Industrial Products' big focus on fire retardants and bromine compounds: Fire retardants greatly depend on the health of the electronics industry.

But now ICL has developed a bromine compound called Merquel to solve the problem of mercury emissions by coal-fueled power stations, and to a lesser degree emissions by hazardous substance kilns, production of chlorine and incineration of medical waste products.

Mercury is released into the atmosphere and then falls to the ground and reaches rivers and lakes through rain or snowfall. Bacteria in rivers and lakes transforms the mercury into methylmercury, a highly poisonous compound that accumulates easily in fish. Even low concentrations of methylmercury can damage the brain, heart, lungs and immune system. Tey can also be passed on to fetuses.

Mercury poisoning, which jeopardizes freshwater fish, is common in the United States. Only 14 states are completely free of it, while in other states the public is warned against eating freshwater fish.

China crisis

The biggest sources of mercury pollution are coal-fueled power stations in Asia, mainly China, which is responsible for 52% of all mercury emissions in the world. But the United States and Europe contribute a substantial portion as well: 9% and 11% respectively, even though regulation is more effective than in China.

But the U.S. authorities are trying to become even more effective. The Environmental Protection Agency is expected to submit an amended bill this spring that will dramatically reduce mercury emissions.

Federal legislation is expected to be relatively stringent. Twenty states have already adopted legislation requiring power stations to reduce their mercury emissions by 90%.

Nevertheless, it's clear that the global effort to reduce mercury pollution cannot be effective as long as China hasn't gotten on board.

ICL's Industrial Products division says that many companies have begun developing technologies to address the problem, 70% to 80% of which use bromine-based chemical compounds that bond with mercury to neutralize it.

Most technologies developed for neutralizing mercury emissions use bromine compounds because these compounds boast the best cost-benefit ratio compared with other materials like chlorine, fluorine or iodine-based compounds.

Tax incentives for power stations

ICL is expected to benefit from the demand created by mercury-emission regulations that are now being drawn up. It will supply bromine compounds to makers of prodcuts that neutralize mercury, which in turn will be sold to power stations.

Industry sources estimate that annual demand for elemental bromine will increase by 30,000 tons with the full implementation of expected state and federal legislation aimed at reducing mercury emissions.

The Chinese market is three times the size of the U.S. market, so overall demand could reach 150,000 tons annually, or 15% to 20% of production capacity worldwide.

ICL's part in global bromine production could grow in the medium term as bromine salts in Arkansas dwindle and demand grows in China. The market for bromine and its compounds is currently estimated at $2.5 billion annually, and by 2015 mercury-emission regulations are expected to expand that market by $400 million to $500 million annually.

Such demand will help ICL increase its annual production capacity, which reached 280,000 tons last year. ICL would thus be less exposed to fluctuating demand for bromine compounds from the electronics and oil-exploration industries.