ICL Drops to 19-Month Low as Royalties Panel Set: Tel Aviv Mover

Israel Chemicals Ltd. fell to a 19-month low on speculation a government review of natural-resources royalties may result in higher taxes for the fertilizer maker, which mines minerals from the Dead Sea.

The shares fell 4.6 percent to 38.2 shekels, the lowest since December 2011, as controlling holder Israel Corp. dropped 6.3 percent at the close in Tel Aviv. The benchmark TA-25 Index gained 0.3 percent.

The government said today that a panel led by Eytan Sheshinski will review tax and royalties policies. A similar Sheshinski-led committee’s recommendations three years ago were the foundation for a government decision to more than double its share of gas and oil profits. Finance Minister Yair Lapid, who took office in March and is seeking to plug a budget deficit, said in April that natural resources are a public asset and the public should be the first to benefit from them.

“There’s a good chance that the recommendations will be very negative for ICL,” Gilad Alper, a senior analyst at Tel Aviv-based Excellence Nessuah Brokerage Ltd., said in a telephone interview. Sheshinski “has already said publicly that ICL isn’t paying close to enough.”

ICL, a takeover target for Potash Corp. of Saskatchewan Inc. earlier this year, said May 27 that a lack of clarity about government policies risks driving away foreign investors. The company said it opposes increases in the government’s take, according to an e-mailed statement sent in response to the panel announcement.

Taxes Reconsidered

Potash Corp. of Saskatchewan Inc. scrapped its proposed bid two weeks after Lapid said April 11 that he’d “adamantly oppose” a sale, which would require government approval. Lapid also announced he would reconsider how resource developers are taxed.

New taxation would mean revising an agreement the government signed last year with ICL that raised royalties on potash sales to 10 percent from 5 percent. As part of that accord, ICL also agreed to spend about $1 billion to dredge salt from evaporation pools that are threatening to flood Dead Sea hotels nearby.

Tel Aviv’s Psagot Investment House Ltd. today cut its rating on both ICL and Israel Corp. to hold from buy.

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