Israel Chemicals CEO Stefan Borgas ordered managers to plan a phased shutdown of the company’s Rotem Amfert unit on Thursday, hours after Health Minister Yael German recommended that all phosphate mining, even on a pilot basis, be banned at ICL’s Sde Brir mining site in the Negev.
German cited concerns that mining phosphate would injure the health of area residents, mainly in the town of Arad.
Borgas said ICL would shutter Rotem Amfert over the next five years, which would mean laying off 1,200 workers employed directly by the company and another estimated 7,000 employed on a contract basis. While the layoffs would not occur immediately, Rotem Amfert would not take on new staff or upgrade or add machinery and equipment at the plant except in critical cases or for environmental reasons, Borgas said.
ICL shares rose 0.2% to close at 30.24 shekels ($8.78).
The Health Ministry does not have the authority to block mining at Sde Brir, so German’s stance amounts to a recommendation to the Interior Ministry, which theoretically could come to a different decision on the matter.
In a letter to the head of the Interior Ministry’s planning authority, Binat Schwartz, German also leveled veiled criticism over past policy-making on Sde Brir. She said decisions on the operation of industrial sites must include a survey of the public health impact and expert opinions on potential risks.
Findings by the Nahal Sorek nuclear research center show that phosphate dust contains dangerous substances including uranium and radon, which emit radioactive radiation.
Officials at ICL say the expert opinion on which German is basing her stance projects a far lower risk than a previous study commissioned by the Health Ministry.
German came to her position based on an opinion prepared by Prof. Jonathan Samet of the University of Southern California. Samet had been retained by the Health Ministry to put the matter to rest amid protests from nearby residents and environmentalists.
German said that after reviewing Samet’s opinion and consulting with Itamar Grotto, the head of public health services at the Health Ministry, she concluded that even a pilot mining project would be ill-advised because it would not reveal whatever problems might be created by more extensive mining operations.
“After [receiving] Samet’s analysis of the expected level of risk from full mining at Sde Brir to area residents as a whole, I became convinced that mining at Sde Brir would present a health risk that would not comply with current accepted health risk standards in the United States and Europe,” she said.
Sources at ICL told TheMarker on Sunday that the battle over the future of the Sde Brir field was far from over. As they saw it, Samet’s opinion refuted the conclusions of a previous analysis carried out for the Health Ministry that projected a 4.5% rise in illness as a result of the mining. Samet’s study, they say, projected a much smaller 0.06% increased incidence.
“Although the minister promised to take a decision based on Samet’s research, she is actually ignoring it,” said an ICL executive who declined to be named. “This is an unbalanced and irresponsible decision, and it in essence shifts responsibility to the Israeli government and the district planning and building committee. The game has changed because Samet’s number permits various officials to make a decision contrary to the Health Ministry’s position.”
The Rotem Amfert unit has been suffering heavy losses since OCP, a Moroccan company that controls a third of global phosphate production, slashed prices by 50% at the end of 2012.
ICL had proposed moving its phosphate mining to Sde Brir as a way of coping with the difficult market, but without that option there is no reason to continue to invest in phosphate production in Israel. The company has been expanding phosphate production overseas, signing a memorandum of understanding last September with Vietnamese company Duc Giang to build a joint venture plant in the Southeast Asian country.
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