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'Canada firm shouldn't merge with Israel Chemicals'
Apr. 2, 2013
Outgoing Environmental Protection Minister Gilad Erdan sent a letter to Prime Minister Binyamin Netanyahu this weekend, expressing vehement opposition to a potential merger between Israel Chemicals and a Canadian natural resource firm that has shares in the Israeli company.
Israel Chemicals, the firm responsible for the majority of mineral extraction on the Israeli side of the Dead Sea, has three categories of shareholders: Israel Corp., which owns 52.30 percent, Potash- Corp Agricultural Society Ltd. – held by Potash Corporation of Saskatchewan, Canada – which holds 13.85% and members of the public and other institutions who govern 33.85%.
The Canadian firm is now considering bidding for the remainder of Israel Chemicals that it does not yet possess, according to Bloomberg News. Such a move, Erdan stressed, could cause severe environmental implications to the Dead Sea as well as harm the region financially.
“The completion of the merger in question without finishing the process of establishing a national policy for managing natural resources would lead to the real endangerment of economic, social and environmental interests of the highest priority,” Erdan wrote.
Erdan also called upon incoming finance minister Yair Lapid to immediately declare that he would freeze conversation on the subject until a discussion within the new government occurs.
An outline of the investment plan in question indicates that such a deal could lead to a significantly increased amount of potash production by foreign parties and thereby inflict added environmental damage upon the Dead Sea region, the minister argued.
Likewise, if the Canadian firm gains a majority hold on company shares, as an international company it could transfer the bulk of production to Jordan, where labor costs are cheaper.
Such a situation could damage the livelihood of thousands of Israeli families, Erdan added.
“As we know, PotashCorp holds a global monopoly in potash production and can influence the prices of potash internationally against the interests of the State of Israel by exploiting its resources,” Erdan wrote, “and this is depending on whether the Canadian company increases the production of potash or reduces it.”
For decades, Israel Chemicals has been mining minerals from the Dead Sea and has caused enormous damage to its environs – decreasing the basin’s water level and harming the area’s natural ecology, Erdan wrote.
Because an expanding financial agreement with Potash- Corp could only expose Israel to further such risks, as well as social and environmental ramifications, the government must first conduct a thorough examination of the country’s potash and phosphate resources, as well as create a unified policy on natural resource management before proceeding with any merger, Erdan argued.
An Israel Chemicals representative did not address the implications of a merger with, or acquisition by, a foreign company, but touted the company’s environmental record.
“In the last three years, ICL invested over a billion shekels in that field, an investment that allows it to operate according to the most stringent standards in the world and even higher,” the representative said, adding that the continuously dropping water levels in the sea were a result of Israel and its neighbors diverting 1.5 billion cubic meters of water annually for other uses.
The company reiterated the fact that it is the largest employer in the Negev and contributes NIS 12 billion to Israel’s GDP, facts that make its fate politically sensitive.
The Finance Ministry refused to wade into the debate, saying that it would not interfere in talks between private companies, though it reserved the right to take a position in the future if an offer were to be put on the table.
Lapid declined to comment on the matter, while Potash Co. did not respond to requests for comment.
Source: Jerusalem Post
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