Haifa Chemicals has confirmed that it recently discontinued its potassium nitrate production, citing the lack of available potash at an agreeable price. Haifa traditionally sources its product from Israel Chemicals Ltd. (ICL). Haifa Chemicals says it has prepared considerable stocks to support all its customers and provide them with all their needs.
ICL rejected Haifa’s allegations, calling them populist and out of touch with reality. ICL noted that Haifa, which is one of the largest potassium nitrate producers in the world, if not the largest, benefited from the 2008 run-up in potash prices as it had a long-term contract with ICL in which it received a formula price derived from ICL’s lowest price to its largest customers. “As a result, the pricing formula in the agreement between Haifa Chemicals and ICL has lagged behind global prices by a considerable rate,” said ICL. “It is estimated that as a result of this price discrepancy, Haifa was able to save several hundreds of millions of shekels.
“All of a sudden, a realistic, fair commercial pricing formula of a commodity which for decades has been relying on the international markets’ potash prices and reflected in long-term contracts between ICL and Haifa Chemicals is being discarded as ‘unsuitable’ for Haifa Chemicals, which cynically and audaciously claims that the potash price demanded by ICL ‘prevents Haifa Chemicals from operating its facilities,'” said ICL.
ICL said Haifa’s plant shutdown is meant to create public pressure to obtain subsidies from a commercial entity on a raw material traded on the global commodity market, with its price being set by market forces. ICL said the true aim is to maximize profits by threatening to lay off employees. The Israeli press reported that some 800 people were impacted by Haifa’s decision.
“Haifa Chemicals’ claim that it can buy potash only from ICL is not only shameless impertinence but straightforward false,” said ICL. “ICL is just one of many potash producers around the world. Haifa Chemicals can import potash at any quantity from other potash producers in other countries and has even done so in the past.”