A government-appointed panel led by economics professor emeritus Eytan Sheshinski of The Hebrew University of Jerusalem is leading a review of the country’s natural resources royalties and tax structure. Its recommendations will reverberate at Israel Chemicals Ltd., which harvests Dead Sea minerals to make fertilizers, and whose chief executive, Stefan Borgas, has warned that “frequent and unplanned regulation” is ‘‘poison’’ for the company.
“Surely governments have the right to change laws and policies from time to time, but this right should only be exercised within the limits of their contractual obligations,” attorney David Tadmor, a former antitrust commissioner who represents ICL before the Sheshinski committee, said in an interview yesterday at his office in Tel Aviv. “ICL maintains all its legal rights, and to the extent necessary, it will defend those rights as it shall see fit.”
Last week Sheshinski said Israel has the right to revise its tax policies because while stability and credibility are a “worthy cause,” they must be weighed against other goals, such as ensuring the public’s fair share of the profits. He declined to comment on Tadmor’s remarks when contacted by phone today.
Shares in the company, weighted sixth-heaviest on the benchmark TA-25 Index, have lost 28 percent since the government announced it would form the panel. International competitors Mosaic Co. (MOS) and Potash Corp of Saskatchewan Inc. have declined 20 percent, battered by the breakup of a potash marketing cartel.
Finance Minister Yair Lapid appointed the review committee in June with a mandate to ensure the public receives its due from natural resources. Recommendations by a separate panel Sheshinski led three years ago underpinned the government’s decision to more than double its share of gas and oil profits.
Israel Chemicals is smarting especially at the prospect of a higher government take because the state already raised the company’s royalty payments and ordered it to pay 80 percent of the cost of a cleanup at its operations site two years ago.
Maintaining obligations under mining concessions is particularly important because they are granted for long periods, Tadmor said.
“The company that receives such a concession must be able to rely on its terms and know that the concession will not be changed unilaterally by the government, simply because the government thinks that it would like to receive more money. That by itself is no justification,” he said.
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