Fertiliser maker ICL Group has given up right of first refusal for its Dead Sea concession under a plan to tender the asset announced by Israel’s government on Thursday, but it will receive some $3 billion if it loses the permit when it expires.
ICL, which extracts mainly potash and magnesium from the concession, has held exclusive rights to minerals from the Dead Sea site for five decades, with the permit set to expire in 2030.
The finance ministry, however, said it was preparing for a “competitive, international and equitable tender … intended to ensure the rightful share for the public and the State from this unique natural resource.”
ICL, one of the world’s largest potash producers, has previously said its Dead Sea assets were worth $6 billion.
Still, it said in a statement to the Tel Aviv Stock Exchange that a memorandum of understanding signed with the government removed significant uncertainty and risk around the termination of the concession, provided the company with a value of its assets, with the timing of payment “enabling the company to plan and prepare in the coming years for the end of the concession.”
Its New York-listed shares ICL.N were down 16.5% at 1835 GMT.
ICL to hand over assets in 2030 for tender
Under the deal reached with the government, ICL would transfer the assets required for full and ongoing operation of the Dead Sea concession in 2030 in exchange for $2.54 billion plus the future actual costs of the project, the ministry said.
It could also participate in the tender.
ICL “continues to believe that it is the most suitable candidate for operating the future concession,” it said, citing its experience and expertise.
If not chosen, it could use the $3 billion from the state to expand and strengthen other areas of its business such as advanced agriculture, phosphate, bromine, and flame retardants, industry sources said.
ICL was initially founded as a state-owned firm called Israel Chemicals but was later partially privatised. In 1975, it bought Dead Sea Works, which had already held the Dead Sea concession – located at the Biblical site of Sodom – since 1961.
Potash, a key ingredient in fertiliser, and magnesium account for about 30% of ICL’s annual revenue of $7 billion. ICL has ongoing potash supply deals with customers in China and India. It also has a potash mine in Spain.
(Reporting by Steven Scheer. Editing by Joe Bavier)
