Final agreement with state remains pending; total costs unclear.
By Ora Coren

Israel Chemicals has agreed to shoulder most of the cost of dredging salt from the bottom of the Dead Sea’s southern half, to rescue the hotel industry from being engulfed by the rising level of brine.

The company, a member of the Ofer family’s Israel Corporation group, has thus accepted the main thrust of the Finance Ministry’s proposal, which is that it pay 90% of the cost.
Dead Sea

The hotels on the Dead Sea’s shore may be saved from inundation.
Photo by: Michal Fattal

ICL says the total cost of dredging the seabed until the year 2030, when its franchise runs out anyway, is estimated at NIS 3.8 billion.

The state and company have yet to agree what to do if the cost proves higher. The state for its part thinks the cost will be nearer NIS 5 billion and the Finance Ministry thinks ICL should shoulder the entire difference, if any.

ICL, on the other hand, is not happy with such an arrangement and thinks the parties should break down types of deviations from the estimates, rather than have it shoulder the entire burden. For instance, the company says, costs could deviate from the estimates for reasons beyond its control.

The company has also agreed to increase the royalties it pays the state from 5% of sales above 2 million tons of potash a year to 10%. Under previous agreements, the state can demand 10% of sales when sales run higher than 3 million tons a year.

In exchange for its acquiescence, ICL expects the state to forgo setting up another public committee that would discuss increasing the royalties for exploitation of natural resources.

A final agreement between the state and ICL remains to be signed. The High Court of Justice has given the two sides until January 7, 2012, to sign the deal.

The part of the Dead Sea that Israelis think of as its southern half is actually a gigantic evaporation pool from which the company, Dead Sea Works, a subsidiary of ICL, extracts potash and other minerals, most of which are exported.

The company transports mineral-rich water from the northern part of the sea to its southern end canal. The snag is that the water also bears silt. This silt builds up in the southern part, raising the water level.

The hotels would have been inundated long ago if not for giant earth berms, which bear environmental costs of their own.

ICL said it was negotiating with a positive attitude with the goal of reaching an agreement with the Finance Ministry.

The Finance Ministry said it had been negotiating with ICL intensively for months and last week had provided its final proposal, which ICL is supposed to respond to by tomorrow night.

Ministers oppose plan, demand higher royalties

Environmental Protection Minister Gilad Erdan and Tourism Minister Stas Misezhnikov oppose the proposed agreement between the state and ICL. They are demanding Israel Chemicals pay higher royalties, similar to those required with the regard to the exploitation of other natural resources and stipulated by the Sheshinski Committee relating to natural gas.

The two ministers agree that ICL should pay its 90% share of the salt-removal costs, but also want the company to double the royalties it pays for exploiting Israel’s natural resources.