Damage to Israel Chemicals won’t be significant, estimates Meitav analyst.

The Ministry of National Infrastructure yesterday almost doubled the royalty fee it collects on phosphates mined in Israel. That affects mainly Israel Chemicals, which mines phosphate rock in the Dead Sea area. ICL will have to pay the state 44.3¢ for every ton of phosphate it extracts, an increase of 84.5% from the 2009 royalty rate of 26.34¢ a ton.

The decision was handed down by the ministry’s Natural Resources Licensing Administration, after it crunched the numbers. It is a blow to ICL, which is negotiating other issues with treasury officials. The Finance Ministry, as TheMarker reported yesterday, is considering a compromise under which ICL would shoulder more of the cost of saving hotels at the Dead Sea from flooding in exchange for paying lower royalties to the state. ICL mines potash and other minerals at the Dead Sea, which is raising the level of the land in the sea’s southern half − and hence the water level.

“This won’t have a lot of impact on Israel Chemicals. At most we’re talking about a couple of millions of dollars,” Gilad Alper, an analyst at Meitav, told Reuters.

Phosphates are mined under the Mines Law, which sets royalties at a percentage of the mined mineral. Until 1997 the royalty on raw phosphate was just 2.5¢ per ton. Following negotiations with ICL the rate was increased in 2009. The latest hike is for 2010 − better late than never as far as the state is concerned.