Israel Chemicals exec: Royalties can't be raised

Dead Sea Works SVP Noam Goldstein: In 2030, our franchise expires and the government can set 50% royalties and 50% income tax.

"In the new franchise, the government can set royalties at 50%," Dead Sea Works SVP Noam Goldstein told a panel on the future of the Dead Sea at a Friends of the Earth Conference in Herzliya today. His comments come amid the Sheshinski II Committee's discussions on royalties paid on national resources.

The Water Authority says that the government's take on Israel Chemicals Ltd. (TASE: ICL) profits is just 18%, a number that Goldstein rejected. "We don’t accept the Water Authority's position. They apparently had an interest in showing a low number. We'll see what the Sheshinki Committee final decision will be on the desirable percentage."

Goldstein said that the royalties that Israel Chemicals pays should not be raised. "In 2030, our franchise expires and the government can then decide what to do with the land. In the new franchise, the government can set 50% royalties and 50% income tax; do what you want. At the moment, the most important thing to do is to create certainty for the whole area. It's important for the region's future that the discussions about the franchise are not held at the last moment, but now, which will ensure the ability of everyone involved to operate."

Goldstein added, "The government decided to award a franchise to a company to manage this resource. Under the terms of the franchise, terms were set for the royalties we pay the government. In the past three years, Dead Sea Works' expenses burden has risen sharply. Our current burden, as we stated in our position paper to the Sheshinski Committee, is higher than that of our competitors, because a large part of the charge isn't a function of profit, but of turnover or income, which means that if prices fall - and prices that go up can also come down - the public's take of our profits can reach 80% or even 90%."

Published by Globes [online], Israel business news - www.globes-online.com - on November 14, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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