Two leading Israeli lobbies have petitioned Israel’s Supreme Court against the agreement approved on January 1st by the Israeli government and Israel Chemicals Ltd. (ICL) for the removal of salt from the Dead Sea and a new royalty regime.
The agreement calls for ICL to pay $800 million for the salt harvesting, with the government covering $200 million. However, half of the government payment will be offset by indirect payments from the company. ICL will bear the cost of any overruns on the project, which involves the construction of a huge conveyor system to remove the salt. The government will not intervene in the planning of the salt harvesting project except to instruct the country’s planning authorities to expedite approval due to the importance of the project.
The royalty agreement doubles the government take from 5 to 10 percent on production above 1.5 million tons beginning this year. The agreement between the Finance Ministry and ICL received overwhelming backing by the Israeli government. The major opponents – Environmental Protection Minister Gilad Erdan and Tourism Minister Tourism Minister Stas Misezhnikov – bitterly attacked the agreement. The only change to the original agreement will allow the royalty issue to be reviewed in two years time.
In their petition, the Israel Union for Environmental Defense (IUED) and the Movement for Quality Government called for the cancellation of the agreement. The petition argues that the agreement with ICL "is unreasonable and based on incorrect assertions." The two powerful lobbies also said it violates the public interest and social justice, and that the agreement was concluded without any public input and with a total lack of transparency. The petition went on to say that the agreement ran counter to the principles of proper public administration.
Under the government decision, a team was established to make recommendations within six weeks on the use of the increased royalties. They are to be paid into a special fund that will contribute to the cost of rehabilitating the Dead Sea. Opposition Labor Party leader Shelly Yachimovitch called the agreement with ICL “miserable” and charged that it left the public only “crumbs” from the country’s natural resources.
Meanwhile, the broader issue of royalties on natural resources has also come up for review by the Israeli Finance Ministry, which could have an impact on royalties that ICL pays on phosphates. A new formula was instituted in 2009, and royalties were raised from 2.5 US cents a ton to 26 cents a ton. The following year they increased in accordance with the new formula to 44 US cents a ton. However, at current phosphate rock prices, this amounts to an increase of only around 0.25 – 0.3 percent, which is far lower than the royalties on potash and natural gas. Israel’s Energy and Water Ministry is planning to conduct a survey on royalties for the country’s natural resources in comparison with the regimes that are in place in other countries. The ministry said that the results of the survey will serve as the basis for recommendations to update the situation in Israel.