Israel seeks early re-tender of mining rights to shore up Dead Sea


EIN BOKEK, Israel (Reuters) – The Lifeless Sea is shrinking on the fee of a couple of meter a 12 months, abandoning abandoned seashores and sinkholes in a slow-motion environmental catastrophe.

A basic view reveals Lifeless Sea Works manufacturing unit on the Lifeless Sea, Israel July 17, 2018. REUTERS/Amir Cohen

The primary perpetrator is the drying up of the Jordan river, its important tributary, as communities upstream draw on it for farming and consuming. However mineral extraction makes the disaster worse – of the 700-800 million cubic meters of water misplaced annually, 250-350 million cubic meters is because of mining, Israel estimates.

So far, the Israeli authorities has hardly ever intervened within the operations of the most important extractor: the Lifeless Sea Works, previously state-owned and now operated beneath a 70-year concession by Israel Chemical compounds (ICL).

That’s about to vary.

Israel needs to re-tender the Lifeless Sea mining concession as a lot as eight years forward of schedule, in 2022. It’s motivated not solely by environmental considerations but additionally by worries ICL will maintain off on new investments within the concession’s remaining years.

The federal government believes ICL will conform to its proposal, first as a result of the agency can have the precise of first refusal but additionally as a result of it too has a strong motive to scrap the present concession: an article that offers the federal government the rights to intrude in investments beginning in 2020.

The plant is certainly one of ICL’s core belongings, producing potash that goes into fertilizers, bromine for flame retardants and different merchandise bought for billions of dollars worldwide.

The corporate, managed by billionaire Idan Ofer’s Israel Corp, has not made its place clear. It declined to offer a right away touch upon its stance when contacted by Reuters.

“This can be a one-time alternative, because the concession involves an finish and we enter a brand new interval, to set requirements for the manufacturing unit’s operations and the environmental influence on the entire space,” stated Galit Cohen, deputy director-general for coverage and planning on the Environmental Safety Ministry.

Cohen was on the high-ranking inter-ministerial committee that produced a preliminary report in Might with tips that goal to steadiness income with environmental pursuits within the Lifeless Sea for the primary time.

A basic view reveals lodges on the shore of the Lifeless Sea, Israel July 17, 2018. REUTERS/Amir Cohen

In the intervening time, ICL is basically free to do no matter it needs to maximise manufacturing, Cohen stated, chatting with Reuters beneath a date tree on a northern seashore on the lake.

“They haven’t any incentive to cut back the quantity of water they pump or take into consideration from the place they get the earth to construct their dikes,” she stated.

The Lifeless Sea has been in style for millennia for well being seekers and vacationers who come to drift in its high-density waters and smear its mud on their pores and skin. With out intervention, it’s going to preserve dropping water, important to the mineral extraction course of, although consultants imagine it might finally attain equilibrium at a a lot smaller dimension.

ICL stated in a July 5 letter to the committee that its report raised “difficult authorized, financial, operational and engineering points, and ICL has vital reservations about a part of what was stated in it”.

“The corporate is finding out the report and can relate to it as customary inside the framework of the general public listening to,” ICL stated in a press release to Reuters.

In its 2017 annual report, the corporate stated its capacity to refinance debt within the subsequent decade “… relies upon, amongst different issues, on extension of the concession past 2030.”


The manufacturing unit’s new license, whose time period has not been set, will embody pumping limits coupled with monetary incentives to make use of much less water, the committee’s report stated. The quantity of territory open to quarrying and drilling for wells shall be diminished.

Last suggestions due round September aren’t anticipated to vary materially from the interim report’s, stated a senior authorities official, who requested to not be recognized given the sensitivity of the difficulty.

“We expect everybody has an curiosity in making the tender earlier,” the official stated. “The worth of the asset will get decrease as we get nearer to the tip of the concession interval and it’s unclear what is going to occur after 2030.”

When the corporate was privatized within the 1990s, the federal government saved a “golden share” that gave it some oversight, along with the duty beneath the phrases of the concession that the corporate search its approval for any new funding.

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Michael Vatine, an analyst with Halman-Aldubi Funding Home, stated ICL was more likely to need to keep away from a decade of shut authorities scrutiny.

“I feel the corporate understands it must clear the fog relating to the long-term … and never go away its traders feeling unsure,” he stated.

With income of $5.four billion in 2017, ICL manufactures a spread of merchandise from industrial chemical substances to meals components. It’s the world’s sixth-largest producer of potash and provides a couple of third of the world’s bromine, utilized in fireplace retardants.

The corporate doesn’t share publicly how a lot of its revenues come from the Lifeless Sea, the place it additionally mines magnesium and salts.

Prices on the manufacturing unit are decrease than at standard mines, which are sometimes a whole lot of meters deep. Photo voltaic evaporation is much less vitality intensive and the local weather permits mountains of potash to be saved exterior and bought when costs are excessive.

In line with their annual experiences, ICL produced three.7 million tonnes of potash on the Lifeless Sea in 2017 vs 2.1 million tonnes extracted by Arab Potash, which has unique rights on the Jordanian facet that expire in 2058.

As ICL describes it, there’s a just about limitless provide.

Bidders in a brand new tender would possible embody the standard suspects from the small variety of main potash producers, together with Russia’s Uralkali, Germany’s Okay+S AG and Canada’s Nutrien, the report stated.

Committee chair Yoel Naveh stated it was doable opponents could be scared off by ICL’s quite a few benefits: not good of first refusal but additionally its deep information of the undertaking.

“The state must set a worth and under that not give it to a personal concessionaire,” he instructed parliament in June.

If the minimal didn’t be met, the state ought to take over, he stated. If another person received, ICL could be compensated, he stated, with out naming a determine.

Enhancing by Sonya Hepinstall

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