Israel Chemicals (TASE: CLIM) announced its adoption of a strategic plan to change sources of phosphate for its ICL Fertilizers subsidiary. The plan was designed to bring about substantial change in phosphate sources, and in upgrading and manufacturing facilities, in order to achieve substantial cuts in upgrading and manufacturing costs.
The ICL Group currently secures phosphate rock, the primary raw material in the manufacture of agricultural phosphoric acid, fertilizers and food grade phosphoric acid, from Zin, Rotem and Oron. The rocks from each of these regions differ in terms of their quality and characteristics, as well as in the cost of the associated mining, processing and refinement that they require in downstream plants. Not all types of these rocks are suitable for use in manufacturing all types of downstream products.
ICL Fertilizers president and CEO Asher Grinbaum said that recent technological improvements derived from the company’s R&D made it possible to use expensive varieties of phosphate rock to produce downstream products at Israel Chemicals’ facilities. These products include special phosphate fertilizers, agricultural phosphoric acid, and food grade phosphoric acid. Grinbaum added that as part of the plan, a phosphate calcination facility in Zin, which is a heavy energy user, and is under-utilized, would be closed. In order to manufacture downstream products, ICL Fertilizers plans to use other varieties of phosphate with much lower manufacturing costs produced at Israel Chemicals’ facilities in Zin and Oron. Israel Chemicals expects to record one-time charges related to the closing of the calcination plant of approximately $25 million before taxes, derive primarily from depreciation and other efficiency costs related to the closing of the plant.
”Cutting the cost of manufacturing phosphate, which will reduce the cost of downstream products, is designed to improve Israel Chemicals’ profitability, and bolster its ability to compete in the market,” Grinbaum stressed.
Grinbaum added that closing the Zin plant was in line with Israel Chemicals’ policy of conforming to international environmental standards and reducing as much as possible the impact on the environment of the company’s operations.
Published by Globes [online], Israel business news - www.globes.co.il - on January 2, 2005