The state must immediately set limits on Israel Chemicals’ mining of the Dead Sea and charge it royalties in keeping with the profits it makes and the damage it does to the sea, and to us.
By Merav Michaeli

The Finance Ministry is considering a compromise with Israel Chemicals. This company mines Israel’s natural mineral resources in Sodom, the Negev and the Dead Sea. It is laying golden eggs because the minerals are simply there, in large quantities, no special investment is needed to locate them, nor is it complicated to extract them. Therefore, it is also not expensive to do so.

Moreover, these minerals are in very high demand, so Israel Chemicals earns a lot of money. In 2009, for example, the company’s revenues were approximately NIS 17 billion, and its net profit was NIS 2.92 billion.

In 1995, the government took this precious public resource and sold it to the Eisenberg family, which later sold it to the Ofer family. Thus ever since the company was privatized, its earnings have gone into their pockets: From 2003 to this year, for example, the Ofer family has taken home some NIS 3 billion.

That’s what frequently happens with privatization in Israel, but this case is particularly scandalous. The state gave Eisenberg a huge gift: The company is required to pay royalties of only 5 percent on most of its production. For comparison’s sake, royalties on natural gas, which is more complicated to find and extract, are 12.5 percent. And even those are among the lowest in the world, with the result that a battle is now being wage to raise them.

But Israel Chemicals does not even pay its minuscule 5 percent royalties. Reports commissioned by the Finance Ministry show that Israel Chemicals employed accounting tricks that resulted in it paying royalties of only 2.4 to 3.5 percent between 2000 and 2008.

Israel Chemicals also receives extensive benefits under the law for the encouragement of capital investments, to the tune of NIS 400 million to NIS 800 million a year. It gets them despite the fact that it did not invest in building its production facilities, nor is there any chance that it will move them to Tel Aviv or Hungary. After all, the minerals it mines are in and around the Dead Sea.

But the most immoral piggishness does not relate to money: The extraction of these minerals is seriously damaging the Dead Sea and its environs. It bears sole responsibility for 20 percent of the drop in the sea’s level (which is falling at the rate of one meter a year! ), because it draws off water from the Dead Sea’s northern section. It then channels that water to pools on the southern side – which has caused a rise in the level there of about 20 centimeters a year.

“Environmental harm” sounds to many Israelis like self-indulgence, a problem of the rich who don’t have a threat to their survival hanging over their heads. Well, the survival of the Dead Sea, which is unique on this planet and truly a rare treasure, is threatened. And this threat affects all of our lives.

The Dead Sea’s declining water level creates sinkholes into which we can fall and be killed. It damages infrastructure. The water is retreating from recreational areas on the northern side, and from us. And the rise on the southern side could flood the hotels there. Today, an ugly levee made of sand protects them, but it won’t for long.

Yet none of that leads Israel Chemicals to mine any less, only more.

Now the Finance Ministry has proposed a compromise: Israel Chemicals will continue to pay piddling royalties, but will participate in the cost of saving the hotels from inundation. Amazing: The rise in the water level is a direct result of the mineral extraction. Thus the cost of repairing the damage is, by any logic, part of the cost of producing the minerals – a cost that should be born by the company, not by us.

What the state, its leaders and its civil servants, who kowtow to money, must do immediately is set limits on Israel Chemicals’ mining of the Dead Sea and charge it royalties in keeping with the profits it makes and the damage it does to the sea, and to us.