The strike that shut down operations at Dead Sea Works (DSW) has ended, and production resumed February17 at the company’s plant in Sdom at the Dead Sea. Israeli industry sources estimated that the strike cost the parent company, Israel Chemicals Ltd. (ICL), some $110 million, as all shipments ceased in early January.
The end of one of the longest industrial strikes in Israel some 44 days followed the intervention of the chairman of the powerful Histadrut Labor Federation, Ofer Eini. He held talks with senior management officials from ICL, along with DSW union members.
Management agreed to a new wage agreement that is expected to cost the company $55 million over five years. The agreement also contains a commitment by the union to refrain from any labor disputes or sanctions. However, industry analysts said that the agreement could lead to demands by workers at other ICL subsidiaries in the months to come.
The strike also forced the closure of Haifa Chemicals’ two plants at Haifa and Ramat Hovav. DSW is Haifa’s sole provider of potash for use in the production of potassium nitrate. DSW supplies Haifa with 350,000 mt of potash a year; the company received its last shipment in mid-January.
The end of the strike came only days after DSW announced a major supply agreement with China. ICL Fertilizers said it will supply 500,000 mt of potash in the first half of 2011 to Chinese customers. A report issued by Psagot Investment House Ltd. predicted sales of 790,000 mt to China in 2011. The report by the Tel Aviv-based investment bank said that based on the agreement for the first half, quantities could surpass that level.
John Kreizman, Clal Finance chemical and pharmaceutical analyst, noted that DSW would not have any difficulty supplying the Chinese customers as it has an inventory of 1.8 million mt. Unlike most potash producers, DSW has the capacity to store large quantities of material at Sdom due to the climatic conditions. He noted that the latest agreement underscores the growing importance going forward of the Chinese market for ICL. Regarding the strike, he estimates that potash production in the first quarter in Israel will be down by 200-300,000 mt, and that the company will attempt to offset the loss by increasing production at Sdom as well as in Spain and the U.K.
DSW noted that the price was in line with recent deals signed by other producers and is approximately $50/mt higher than 2010 prices, putting it at around $400/mt.