ICL (TASE: ICL: NYSE: ICL) is still waiting to hear whether its concession to mine phosphates at the Rotem Amfert plant in the eastern Negev will be renewed when it expires at the end of the year.
Minister of National Infrastructures, Energy and Water Resources Karin Elharrar has announced that she won't extend the concession for the factory which employs 1,200 people, until an examination into the past royalty payments by ICL has been completed by the Ministry of Finance's Accountant General's office. KAN Channel 11 News has reported that Elharrar has contacted Minister of Finance Avigdor Liberman with a request to expedite matters.
At this stage, although it is still only an examination, there could be far reaching consequences if Elharrar ultimately decides not to extend the phosphate concession.
Phosphate mining has been conducted at the site for decades under the concession that expires at the end of 2021. As there is only a relatively small amount of phosphates remaining, Elharrar's predecessor Yuval Steinitz decided three years ago to support extending the concession without issuing a tender, on the assumption that there was little likelihood of a new bidder emerging.
However, the renewal of ICL's concession, which has been approved by the Israel Antitrust Authority, also needs approval by the Knesset Finance Committee. But the process was halted by the change of government and the position on the matter the new heads of the Ministry of National Infrastructures, Energy and Water Resources is now not clear.
The decision to extend the concession without a tender has been harshly criticized by Lobby 99, a political group that promotes the public's interest on socio-economic issues. Lobby 99 claims that ICL is being given a 'gift' without the company committing to clean the land after operations on the site are ended. Lobby 99 also insists that the royalties paid by ICL for the resources are too low, and that Steinitz should have attempted to raise them.
ICL is currently paying 5% royalties for the phosphates as set by the Sheshinski Commission - a similar rate to that being paid for the natural gas in the Leviathan and Tamar offshore fields.
In the second quarter, ICL reported $77 million profits from phosphates, although only a small part of that was in Israel. In all of 2020 the government received royalties of NIS 8.6 million for the Rotem Amfert phosphates, after receiving NIS 10.3 million in 2019.
Under these circumstances it remains unclear why the Ministry of Finance is taking so long to examine matters and why Elharrar is in no rush to adopt Steinitz's recommendation.
The Ministry of Finance said, "The examination on the subject of the royalties relates to past payments by Rotem Amfert to the state. The aim of the examination is to check the diligence of the royalty payments according to the concession agreement with the company and mechanisms set in law. The examination is due to be completed in the coming months and depends on receiving materials from the company."
Published by Globes, Israel business news - en.globes.co.il - on September 2, 2021
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