Haifa Chemicals Netted Half Billion in 2008, Claims Dead Sea

If Haifa Chemicals netted over NIS 500 million in 2008, as estimated by a source at Dead Sea Works, why has the agrochemicals manufacturer halted production instead of using its profits to continue the company's operations?

The question is of great interest to Dead Sea Works, which supplies Haifa Chemicals with potash for its products, and which Haifa Chemicals has accused of charging too much. Haifa Chemicals in fact shut down production, claiming that Dead Sea Works, a subsidiary of Israel Chemicals, is charging it prices that render production uneconomical.

"Haifa Chemicals wants Knesset members to believe the situation is dire and that the company has no inventory to sell, plus other claims that cannot be checked or refuted due to the cloak of secrecy surrounding the company's financial reports," the source at Dead Sea Works charged.

As a privately owned monopoly, Haifa Chemicals is not legally required to publicize its financial results.

The source at Dead Sea Works claimed that Haifa Chemicals' management is misleading its own workers, "who have no inkling of the company's tremendous profits."

In Dead Sea Works' view: "An absurd situation has been created, in which Haifa Chemicals, which is controlled by a privately owned American company, is pressing for lower potash prices and expects MKs and regulators to accept their word on the matter. Haifa Chemicals must reveal its financial data before any discussion of its demands."

Dead Sea Works delays changes in the price of the potash it sells to Haifa Chemicals when world prices change. This practice usually works in Haifa Chemicals' favor, and the company raked in profits in 2008 for this very reason, the DSW source argues: It sold products at high market prices, while buying its raw materials at the previous year's low prices.

"The figures are exaggerated," responded a source at Haifa Chemicals. "This is another attempt by Israel Chemicals' media advisors to divert attention from the potash cartel. Ever since the state ended its regulation of potash prices, in March 2006, ICL has raised its price by 400%, to over $600 a ton. The Israeli government should protect the interests of Haifa Chemicals, just as other countries protect local industries, by intervening and setting a low, competitive price for potash."