The system for intercepting short-range rockets will be operational by the summer of 2010, according to its developer, Rafael.
An Iron Dome prototype passed a test last month, and another test, this time a complete rocket interception, is planned for the summer.
Rafael is supposed to supply the Israel Air Force with its first system by the end of 2009, and a battalion will be formed to operate it.
The first operational battery will defend the area near Sderot and probably also Ashkelon.
Meanwhile, the Elta factory of the Israel Aerospace Industries is currently upgrading the Iron Dome's radar system so that it can identify rocket launches from a greater distance.
Rafael plans to begin industrial production of the system once the first battery proves it has met requirements. At this stage the Defense Ministry has not decided how many Iron Dome systems or Elta radar systems to order.
The manufacturer estimates that it will cost $50,000 to intercept a single rocket, based on the price of manufacturing 1,000 intercepting missiles.
Rafael says the arguments of the project's detractors - that there is a vast difference in the cost of manufacturing a Qassam versus the cost of intercepting it - are exaggerated. They argue that the Iron Dome's radar system is meant to assess which rockets may hit a populated area, and intercept only the rockets that pose the most risk.
Of the rockets fired by Hezbollah in 2006, only 25 percent hit populated areas - about 1,000 rockets. Rafael says most of these would have been intercepted by the new system, at a cost of tens of millions of dollars. They add that the lives saved and the strategic impact is worth the cost.
Rafael officials believe they will meet the project's ambitious timetable, and say this would be a major achievement, since it usually takes much longer to develop and produce systems of this sort.
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