Israel’s Haifa Chemicals has been forced to put all of its 800 workers on indefinite leave due to the strike at its potash supplier, Dead Sea Works, an Israel Chemicals Ltd. subsidiary. The company said the ongoing strike (GM Jan. 31, p. 1) has led to a severe shortage of potash, which is used in the production of potassium nitrate. Haifa’s decision was taken after an assessment that the strike at Dead Sea was likely to continue for some time.
“The move is part of an effort to cut our costs at a time when we have been forced to shut down all production,” said a Haifa Chemicals spokesman. Last week the company halted production at both of its plants in Haifa and in Ramat Hovav. The company spokesman said that “the company had no alternative source of supply.” Dead Sea supplies Haifa with 350,000 mt of potash a year. The spokesman refused to say whether the company was looking for alternative sources of supply outside Israel.
Haifa received its last shipment of potash from Dead Sea Works nearly two weeks ago. Haifa CEO Nadav Shahar has estimated the losses so far at millions of dollars.
Meanwhile, the Beer Sheba Labor Court has given the union and the Histadrut Labor Federation the right to continue the strike at Dead Sea Works, but barred workers from shutting down the chlorine plant at Sdom, which services Dead Sea Bromine, another subsidiary of Israel Chemicals. The court instructed the union and management to continue negotiations aimed reaching a new wage agreement. The workers are demanding a 20 percent increase, as well as participation in the management of the company. The union accused management of attempting to bring in temporary workers to break the strike. Management denied the charge.
The strike began at the beginning of January and has led to a total halt in all shipments of potash from Israel. An industry source estimated that the strike has caused tens of millions of dollars in damages.
A senior analyst at Bank Hapoalim predicts that Israel Chemicals will be forced to issue a profit warning for the first quarter of 2011 due to the strike at Dead Sea Works. Analyst Yaron Friedman noted that the workers have stopped production and are also preventing the shipment of potash from existing stocks. Friedman said that potash stocks amounted to 1.84 million mt at the end of the third quarter. The analyst estimated that sales from European production would amount to 200,000 mt in the first quarter, as opposed to sharply lower sales of potash produced in Israel. Total production is estimated at around 4.5 million mt, 3.5 million mt of which is produced in Israel. Friedman also said that the strike is delaying the signing of an agreement on supplies to China and is causing difficulties in completing the existing agreement with India, which is due to be completed at the end of March.