Israel Chemicals: Mining at Sde Barir essential

Dead Sea Works picture: Tamar Matzapi

Israel Chemicals says failure to obtain a permit to mine at Sde Barir will put its entire Negev phosphates business in jeopardy.

Israel Chemicals (TASE: ICL: NYSE: ICL) says that it has no intention of shifting its Dead Sea Works activity overseas under the streamlining plan in which it seeks to lay off 140 workers, but the company warns that unless the state allows it to mine at Sde Barir, near Arad in the Negev, hundreds of employees will be dismissed.

"Failure to grant a permit to mine phosphates at Sde Barir will, within a fairly short time, put into question all of the Israel Chemicals group's phosphates business in Israel, and will be liable to lead to the closure of the Rotem plant in the Negev and to the dismissal of many hundreds more workers," Israel Chemicals writes in a letter to the Ministry of Finance.

In its letter, Israel Chemicals stresses its connection to Israel and its investment in the Negev. Alongside this, it states that its strategy has three components: "Operational excellence and raising efficiency and cost-savings; promotion of growth generating projects through expanding production capacity, existing activity, and research and development together with examination of investments and collaborations; and strengthening the enterprise infrastructure that assists growth, and improving management and control in a way that sees the Israel Chemicals group as a united company."

Israel Chemicals management says that this strategic plan, approved in August 2013, "is already at the initial stages of development and execution."

The Rotem plant employs 1,200 people. The dispute over mining at Sde Barir started during the term of former deputy minister of health Yaakov Litzman, who opposed the setting up of a pilot. This was accompanied by objections from local residents and environmental organization Adam Teva V'Din Israel Union for Environmental Defense. Israel Chemicals for its part investment heavily, particularly in the media, to promote its case.

The issue was reopened in 2013, when Israel Chemicals CEO Stefan Borgas said, "We have reached an important crossroads as far as the future of phosphates in Israel is concerned." Israel Chemicals estimates that the phosphate reserves in the Negev could come to an end in the coming decade, while Sde Barir could supply 65 million tons of phosphates, extending the company's activity in the Negev by many years.

There then commenced an exchange of verbal blows with Minister of Health Yael German. Israel Chemicals pressed German to change her stance, claiming that it would lead to the closure of the Rotem Amfert subsidiary, and the layoffs of thousands of employees. German was not persuaded, and remained adamant in her view that mining at Sde Barir would constitute a health hazard.

Published by Globes [online], Israel business news - www.globes-online.com - on March 16, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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Dead Sea Works picture: Tamar Matzapi
Dead Sea Works picture: Tamar Matzapi
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