The government must create a national database to control the country’s natural
resources, as well as limit the activities of mining giants, environmental
advocacy group leaders stressed on Sunday.
“The field of natural
resources in Israel has been neglected and abandoned for many years, and the
interests of the public with regards to the resources are pushed aside,” said
Amit Bracha, the executive director of Adam Teva V’Din (Israel Union for
Bracha was addressing the second half of a
two-part meeting of the Sheshinski Committee 2, the first half of which occurred
on December 16. Headed by Prof. Eytan Sheshinski, the committee aims to examine
the state’s royalty policies for exploitation of natural resources other than
oil and gas, at the behest of Finance Minister Yair Lapid. Sheshinski 2 is the
successor of the original Sheshinski Committee, whose determinations about
hydrocarbon taxations became law in March 2011.
During the December 16
meeting, committee members heard from representatives of Israel Chemicals (ICL),
to determine whether the state is receiving proper compensation for the
company’s mineral mining from the Dead Sea.
Although that meeting was
supposed to feature presentations not only from ICL but also from
environmentalists, the committee postponed the latter half to Monday due to
At Monday’s follow-up meeting, Bracha explained how a
national database for natural resources, including a mechanism for controlling
their export, is critical. The knowledge that exists on the subject today is
severely lacking, and in some cases is missing crucial geological information,
In addition, Bracha and his colleagues argued, the government
should designate the royalties received as a result of resource mining to
environmental causes, such as the research and development of technologies that
can one day replace the use of natural resources.
As far as the Dead Sea
in particular is concerned, a longterm policy is urgently needed regarding the
extraction of resources from this body of water, said Dana Tabachnik, head of
economics and natural resources at Adam Teva V’Din.
Stressing that the
government must increase the public’s share in the resources, Tabachnik proposed
a thorough examination of ICL’s fiscal operations, including royalty rates,
profit taxes, permit payments and external costs.
recommended that the government review the lease fees paid by ICL, arguing that
for 20 years the amount has not been updated.
At the December 16 meeting,
ICL president and CEO Stefan Borgas warned that if the government chooses to
significantly raise royalties or taxes connected to mining mineral resources,
companies like his may have no choice but to bring their business
Investing in Israel, Borgas warned, has become very
unprofitable in comparison to countries like Spain. Other countries with large
reserves of potash – a salt mined by ICL subsidiary Dead Sea Works for
fertilizer production – provide incentives for companies to produce the
resource, he explained.
“Israel is known as the ‘Start-up Nation,’ and
maybe it will stay as the start-up nation because with this behavior the country
will never be able to build large, industrial companies,” Borgas said at the
Throughout 2011, environmental and tourism officials fought for a
plan to fully harvest salt from the southern portion of the Dead Sea, as a
solution to rising water levels in the basin that were creeping toward the
shores of the area’s hotel zone. Environmentalists argued at the time that the
costs associated with dredging the 20 million tons of salt over the next two
decades should be shouldered entirely by ICL, as the company’s mineral
extractions were the main cause of the rising waters.
On December 28,
2011, after a long standoff with ICL, the Finance Ministry signed an agreement
that Dead Sea Works would contribute NIS 3.04 billion toward the full salt
harvest of the Dead Sea’s southern basin. The state would fund the remaining NIS
Meanwhile, the agreement stipulated that the state’s share
of royalties from potash use would rise from 5 percent to 10%, with the extra
royalties to be designated to a Dead Sea rehabilitation fund. The added
royalties would translate into an extra NIS 1.772 billion for the rehabilitation
fund by 2030, the Finance Ministry said at the time.
Taking the added
royalties into account, about 45% of ICL’s profits now go to the Israeli
government, said Howard Rosen, from FIT Consulting Canada ULC, at the December
Around the world, he explained, potash companies on average
pay about 29% of their profits to the governments in which they
Ahead of Monday’s session, MK Dov Henin (Hadash) submitted a
query to Lapid asking why Sheshinski 2 was giving ICL priority over other
presenters, as ICL representatives spoke for eight times the halfhour interval
allotted to environmental groups.
“In front of the Sheshinski Committee
are many heavy questions, which touch upon natural resources that the state has
abandoned for years to tycoons rather than using them for the benefit of public
interest,” Henin wrote.
Relevant to your professional network? Please share on Linkedin