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Environmentalists urge state to limit activities of mineral miners
By SHARON UDASIN
06/01/2014
State has abandoned natural resources to tycoons rather than using them for public’s benefit, charges Hadash MK Henin.
 
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 Environmental Defense).

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 weather conditions.

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, he said.

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.

Tabachnik likewise 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 elsewhere.

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 time.

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 760 million.

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 16 meeting.

Around the world, he explained, potash companies on average pay about 29% of their profits to the governments in which they operate.

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.
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