Israel Chemicals Ltd. (ICL) fell to the lowest level since 2011 as Barclays Plc. (BARC) cut the fertilizer maker’s price estimate by 15 percent on concern a government review of natural-resource royalties may lead to lower profits.
The shares of the company which extracts minerals from the Dead Sea to make fertilizers and potash dropped 1.1 percent to 36.4 shekels, the lowest since December 2011, at 1:50 p.m. in Tel Aviv. Controlling shareholder Israel Corp. (ILCO) declined 2 percent, while the benchmark TA-25 (TA-25) Index decreased 0.8 percent.
Finance Minister Yair Lapid, who took office in March and is seeking to narrow the budget deficit, said in April natural resources are a public asset and the people should be the first to benefit from them. New taxation would mean revising an agreement the government signed with Israel Chemicals last year that raised royalties on potash sales to 10 percent from 5 percent. The company said last month that a lack of clarity about government policies risks driving away foreign investors.
“Given a high probability that royalties will rise, despite having just been set in early 2012, we cut our price target to 47 shekels,” Barclays analyst Joseph Wolf wrote in an e-mailed note today, while maintaining his overweight recommendation. “We see the royalties uncertainty as the largest risk currently.”
Israel Chemicals shares have decreased 9.1 percent since the government appointed a panel led by Eytan Sheshinski to review tax and royalty policies on June 17. Sheshinski led a committee three years ago whose recommendations formed the foundation for the government’s decision to more than double its share of gas and oil profits.
Twelve analysts have a hold rating on the shares, while six recommend buying them, data compiled by Bloomberg show.
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