Israel Chemical Ltd. Drops as Official Calls for Dead Sea License Tender

  • Accountant general recommends auctioning rights for the mine
  • ICL owns rights until 2030; shares drop the most in 5 months

Shares of Israel Chemicals Ltd. fell the most in five months after an Israeli official called on the government to auction off rights to mine the Dead Sea, instead of automatically extending the chemical giant’s license to the area.

Outgoing Accountant General Michal Abadi-Boiangiu called for a tender of mining rights when Israel Chemicals’ license expires in 2030, according to a copy of her letter to the Finance Ministry seen by Bloomberg. 

"Holding a tender process is the right way to maximize the public’s part of the Dead Sea natural resources," Abadi-Boiangiu wrote. The recommendation doesn’t preclude ICL from renewing the license if it wins the tender.

The accountant general serves in Israel’s finance ministry, which decides on the fate of the license. The company declined to comment.

Shares dropped as much as 3.4 percent Tuesday, the most on an intraday basis since August, and were down 1.8 percent at 17.19 shekels as of 3:05 p.m. in Tel Aviv.

While ICL holds the license for another 13 years, the issue has been under discussion because the company wants clarity before committing to further investment in the Dead Sea. It also would take time to reach an agreement to compensate ICL if it lost the license. 

Mining for minerals such as potash and bromine at the Dead Sea has generated the bulk of ICL’s domestic profits, which historically have accounted for more than half of overall income. The company, controlled by billionaire Idan Ofer, reported $376 million in operating income from Israel in 2015, or 48 percent of its total, according to data compiled by Bloomberg. That was down from 66 percent the year before.

A crash in commodity prices has crimped profits of fertilizer manufacturers and chemicals companies around the world, leaving ICL searching for other ways to pay down its $3.9 billion of debt, Bloomberg reported in August. The company is searching for a new chief executive officer after Stefan Borgas resigned in September.

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