Haifa Chemicals Ltd. has halted production of fertilizers because of a shortage of potash caused by labor sanctions at supplier, Israel Chemicals Ltd. (TASE: ICL) unit Dead Sea Works, including all potash mining.
As the potash shortage worsened in the past two weeks, Dead Sea Works management announced that it would try to send potash to Haifa Chemicals from its inventory, so that the company would not face financial loses from a halt to production. Haifa Chemicals said today that, despite these efforts, the potash inventory at Dead Sea Works has run out, forcing the company to halt production.
Dead Sea Works is the sole supplier to Haifa Chemicals of potash for its one production line. Haifa Chemicals uses 350,000 tons of potash a year. The company said, "Given the global potash market structure, and total domination by Dead Sea Works to deliver potash in Israel, Haifa Chemicals has no alternative of buying potash in another country."
The company said, "The shutting down of our production lines because of labor sanctions at Dead Sea Works proves Haifa Chemicals's intolerable dependence on a single potash supplier, because of the exclusive mining rights given to Dead Sea Works."
Haifa Chemicals warned of heavy and possible irreversible financial losses to it and third parties due to the shutdown. The company will continue to pay salaries because it is not a party to the labor dispute at Dead Sea Works. However, employee salaries will be hit by a loss of overtime and extra shift work.
Published by Globes [online], Israel business news - www.globes-online.com - on January 23, 2011
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